Round Hill Music Royalty Fund (RHM) has announced that the net proceeds of its C Share issue that was undertaken in July 2021 have now been fully invested and, accordingly, plans have been put in place to convert the C Shares into Ordinary Shares. The calculation date for the Conversion will be 29 April 2022 and the conversion date is expected to be 11 May 2022 (on this date, dealings in the C Shares will be cancelled and dealings in the new Ordinary Shares arising from the conversion will commence). C Shareholders will qualify for the dividend for the period commencing 1 April 2022 following conversion of their C Shares into new Ordinary Shares.
Following the recent deployment, RHM says that its investment manager has identified a near term pipeline in excess of US$120 million of investment opportunities that includes music publishing, master recordings and neighbouring rights from various iconic artists, songwriters and producers. RHM’s board say that it is considering RHM’s options “to take advantage of these strong opportunities”.
Deployment of the C Share proceeds
In July 2021, RHM raised gross proceeds of US$86.5 million through an issue of C Shares and, since then, has completed a number of acquisitions utilising the net proceeds of the C Share Issue as well as debt drawn from its existing revolving credit facilities (RCF). To clarify, as at 10 February 2022, RHM has utilised c.US$86.5 million being 100 per cent. of the net proceeds of the C Share Issue and had drawn down c.US$91.7 million under its existing RCF. Details of the specific acquisitions are provided below, but RHM says that the acquisitions have the following characteristics:
- acquired at an average historic three-year net publisher’s share (“NPS”) multiple of 17.9x;
- over 77 per cent. of the income generated is in respect of compositions written between 1950 and 2010;
- over 5,600 musical compositions;
- Rock comprises approximately 90 per cent. of the Copyrights acquired with the C Share Issue proceeds and debt drawn from the RCF. Following these acquisitions, the Company continues to have a truly diversified portfolio in terms of genre: Rock (approximately 54 per cent.); Country (approximately 10 per cent.); Pop (approximately 18 per cent.); Classic R&B (approximately 6 per cent.) and Other (approximately 12 per cent.)1; and
- diversified in terms of income type: performance (approximately 25 per cent.), master recordings (approximately 50 per cent.), synchronisation (approximately 5 per cent.), mechanical (approximately 8 per cent.) and other (approximately 12 per cent.).
RHM’s acquisitions include:
- 11 August 2021, the Company announced the acquisition of the publishing Catalogue of the prolific film score composer and Yes guitarist Trevor Rabin. The acquisition included 3,528 film cues and songs by Rabin.
- 9 September 2021, the Company announced the acquisition of 100% of the master royalty income rights to the first seven albums by Foreigner from Dennis Elliott, the original drummer of the rock group.
- 15 September 2021, the Company announced the acquisition of the recorded music income and publishing rights to a 30-song Catalogue from Tim Palmer, providing exposure to Pearl Jam and Ozzy Osbourne.
- 28 September 2021, RHM announced the acquisition of the master royalty income of 532 original recordings from The O’Jays.
- 2 November 2021, the Company entered into a long-term agreement to administer 100% of the neighbouring rights income, generated from the master recordings, of three long-standing members of the British rock group, Supertramp.
- 29 December 2021, the Company announced that it had acquired a significant share of the publishing rights of Niko Moon, the American country singer/songwriter.
- 31 December 2021, the Board announced that the Company had acquired the master recordings and music publishing assets from the leading American reggae band Rebelution.
- 31 December 2021, the Company announced that it had acquired 100% of a catalogue of 308 tracks from the Richardsons, Jack and his son Garth, made up of producer royalties and neighbouring rights income to timeless classic tracks.
- 5 January 2022, the Company announced the acquisition of a significant share of the master artist royalties and entered into a long-term agreement to administer the neighbouring rights income of the catalogue of Nancy Wilson, acclaimed singer, songwriter and guitarist of Rock ‘n’ Roll Hall of Fame-inducted band Heart.
- 14 January 2022, the Company announced the acquisition of the music publishing, master rights and master rights royalties for, and entered into a long-term administration agreement for the neighbouring rights income from, the catalogue of legendary Whitesnake frontman and Deep Purple lead singer from 1973 to 1976, David Coverdale.
- 8 February 2022, the Board announced that the Company has acquired a significant majority of the rights to a legendarily influential American rock band. The acquisition covers the publishing, masters and neighbouring rights of the band.
Comments from Trevor Bowen, Chair of Round Hill Music Royalty Fund
“We are delighted to announce the successful completion of the Company’s deployment from the recent C Share Issue into eleven high quality catalogues with many well-known songs, and to provide further disclosure on the quality of those acquisitions. Reflecting the Company’s broader portfolio and investment philosophy of preferring catalogues with proven long-term revenue streams, over 77 per cent. of the income generated is in respect of compositions written between 1950 and 2010. Looking ahead, the investment manager’s pipeline is significant and we look forward to updating Shareholders further in due course.”
Comments from Josh Gruss, Chairman and CEO of Round Hill, RHM’s investment manager
“It is fantastic to have had the opportunity to acquire so many high-quality catalogues for the Company with the proceeds from the C Share Issue, providing our investors with access to many leading 20th and 21st century artists including Pearl Jam, Ozzy Osbourne, The O’Jays, Supertramp, Zac Brown Band, Nickelback, Avicii, Rebelution, Alice Cooper, Deep Purple, Yes, Foreigner, Bob Seger, Rage Against the Machine, Chevelle, Rise Against, Trapt, Mudvayne, Heart, and Whitesnake.
As planned, the recent acquisitions significantly increase the weighting of the Company’s diverse portfolio in rock music. Rock is a genre which we believe has among the most compelling fundamentals for successful long-term music royalty investing with a consistently more loyal fanbase, and music which is often more enduring than other genres.”