Valeria Martinez, Investment Week, 15 September 2023:
Hipgnosis Songs’ deal to sell a fifth of its music catalogue to a Blackstone-owned vehicle has been put under scrutiny by analysts, with some raising doubts the move will be enough for shareholders to support the trust’s continuation.
In a stock exchange notice on Thursday (14 September), the trust said it had agreed to sell 29 catalogues for $465m to Hipgnosis Songs Capital, the Blackstone-backed private fund managed by SONG investment adviser Hipgnosis Song Management.
Using the proceeds from the catalogue sales, the board also outlined a share buyback programme of up to $180m and the repayment of $250m drawn under the trust’s revolving credit facility, as well the introduction of additional, lower investment advisory fee tiers.
The move comes more than two months after the board first revealed it had been considering strategic options to re-rate the trust’s share price ahead of its five-year continuation vote, which is set to take place over the coming month…
A nuanced ‘positive step’
Given shareholders and analysts had been calling for Hipgnosis to implement these measures, Matthew Read, senior analyst at QuotedData, told Investment Week the details provided are “certainly a positive step”.
However, he said it would have been beneficial to shareholders to see a third-party offer for these assets, as that would also have given greater credibility to the NAV calculation and discount rates.
“Unfortunately, this does not seem to have been explored, although it is perhaps not a surprise that Blackstone wants to keep control of these assets,” he added.
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