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Music entrepreneur Merck Mercuriadis is to step down as chair of Hipgnosis Song Management, the company he set up six years ago to manage music rights.
The company said on Tuesday that Mercuriadis would exit upon completion of Blackstone’s $1.6bn acquisition of Hipgnosis Songs Fund, which is managed by HSM and owns the rights to works by Blondie and the Red Hot Chili Peppers among others. Blackstone is already the majority owner of HSM.
Mercuriadis said he planned “to undertake a strategic shift of focus, and to spend more time advocating on behalf of songwriters to ensure that they are properly compensated for their work”.
His departure marks the end of an era for Hipgnosis and the wider music dealmaking frenzy that he helped create.
Mercuriadis founded the London investment trust in 2018 as a vehicle to buy songs, calling it Hipgnosis — a reference to an art group that designed album covers for Pink Floyd and others.
A music obsessive with expansive connections in the industry, Mercuriadis pitched songs to institutional investors as a way to make reliable, bond-like returns. Mercuriadis’s offer was compelling: songs were a better investment than oil or gold, and his connections could allow investors to take advantage of the booming industry, he said.
It was an opportune moment. Streaming services had powered a revival in music revenue, while rock-bottom interest rates had left investors searching for places to put their money. As a result, an unprecedented amount of Wall Street cash flowed into song copyrights — which had historically been a staid, arcane pocket of the music business.
But in the past few years Hipgnosis has fallen into disarray after its share price dropped well below the valuation that Mercuriadis’s group said it was worth. On September 30 last year, that was $2.6bn. By March this year, it was $1.9bn, or a net asset value per share of 92p. The share price continued to drop after repeated cuts to the value of its portfolio and questions over its debt levels and governance.
Hipgnosis last year launched a strategic review after it lost a shareholder vote that put its future as an investment trust in doubt. After a protracted bidding war, Blackstone in April agreed to acquire Hipgnosis Songs Fund for almost $1.6bn.
Blackstone already has deep ties to Hipgnosis. The private equity group in 2021 bought a majority stake in Mercuriadis’s management company, HSM, which collects fees for overseeing the listed Hipgnosis fund. Blackstone also created a separate $1bn song-buying fund, which is also managed by HSM.
Blackstone executive Qasim Abbas on Tuesday thanked Mercuriadis for “his support and contribution to HSM”.
“We are committed to the asset class”, Abbas added. “With a strong senior management team now in place, the firm is well positioned to capitalise on the growing market for music rights.”
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