Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Blackstone has ditched the Hipgnosis name for its $3bn music investment group as it prepares to start buying songs again less than a year after its acquisition of the UK-listed owner of rights to songs by Red Hot Chili Peppers and Shakira.
The US private equity group has rebranded its music investment business as Recognition after bringing together its various music interests into one company that will own and manage a portfolio of more than 45,000 songs and recordings from 145-plus catalogues.
The group has rights to material by songwriters and artists including the Fleetwood Mac, Neil Young and Justin Bieber.
Ben Katovsky, chief executive of Recognition, said the new operation would work in a “fundamentally different” way from when it was three separate businesses.
The group will combine the songs and recordings owned by its fund Hipgnosis Songs Assets and the formerly listed Hipgnosis Songs Fund, which Blackstone took private last year.
The deal for Hipgnosis Songs Fund followed a bidding battle between Apollo-backed US investment group Concord and Blackstone, which ultimately won with a bid of more than $1.6bn.
The new group also encompasses Hipgnosis Song Management, which was previously the investment adviser for both funds. Collectively the group’s assets are worth more than $3bn, said people familiar with the matter.
Hipgnosis was originally founded by former band manager Merck Mercuriadis in 2018. It has sought to turn music rights into a mainstream asset class, generating income for investors from streaming, radio play and performances.
Qasim Abbas, a senior managing director at Blackstone, told the Financial Times it would seek to acquire further new music portfolios for the company in future.
He said Blackstone was “committed to the asset class and market”, pointing to “predictable long-term cash flow profile” for music rights. He added that, as Recognition, the company was now set to build on its position as a “leading independent investor in music rights”.
In November last year, Blackstone completed a $1.5bn securitisation of the assets in the former Hipgnosis group, one of the largest issuances of debt for music rights to date.
Abbas said: “There’s increasing and developing interest in the market both from debt investors as well as equity investors. The market is continuing to mature and institutionalise further.”
Katovsky said Recognition was now an integrated company that owned the music and managed that music, adding it was “fundamentally different” from before.
The group had already invested in technology to drive the value of the assets up further, Katovsky added. The investments would encourage use of the material in films and on television and help to collect royalties from around the world, he said.
The scale of the combined business as one of the largest owners of music rights gave Recognition a “unique advantage”, Katovsky added.
“We have a strong ambition to grow,” he said, adding Recognition would be selective about its acquisitions.
“We are going to do them at sensible price points, and we are also going to look to maintain the quality of our portfolio,” Katovsky said.
Read the full article here
