The board of Hipgnosis Songs Fund (SONG) has announced a delay to the publication of its financial results for the six months to 30 September 2023, which were expected to be published today.
The valuation the company received from its independent valuer is materially higher than the valuation implied by proposed and recent transactions in the sector, in particular, the proposed sale of assets to Hipgnosis Songs Capital for net consideration of $417.5 million, reflecting a discount of 24.3% to the valuation of these assets as at 31 March 2023, and the recent sale of non-core assets of $23.1 million, reflecting a 14.2% discount to to the valuation of these assets as at 30 September 2023.
The board therefore sought advice from Hipgnosis Song Management Limited, its investment adviser, which is majority owned by Blackstone, on their opinion on the independent valuer’s valuation. Hipgnosis Song Management Limited eventually provided an opinion, which was heavily caveated, such that the board has concerns as to the valuation of the company’s assets in its interim results.
The company now expects to publish the interim results by 31 December 2023.
QD Comment JC : “This comes hot on the heels of October’s valuation error. The valuation of SONG’s assets has long been doubted by some investors and analysts, especially when the discount rate applied to the fund’s cash flows to calculate the NAV was left unchanged in the face of rising interest rates. The board appears to be rejecting the valuer’s analysis and the recent sale prices support this. The question is, why would the valuer be taking an overly rosy view?”
SONG : More controversy developing for Hipgnosis Songs Fund