Music royalties investor Hipgnosis Songs Fund (HSF), known for buying up back catalogues belonging to the likes of Blondie and Shakira, faces calls to sell some assets to boost a failing share price.
The investment trust’s shares are down around 30 per cent on the London Stock Exchange in the past year as rising interest rates have shone a light on its debt and refinancing.
HSF has also seen deals with artists dry up, and in May Rod Stewart turned down its attempts to add him to its collection.
Some top investors believe the solution is to sell less attractive assets to reinvigorate the stock, and buy back shares.
Tuned in: Hipgnosis owns the rights to song by artists such as Neil Young, Chrissie Hynde and Brian Higgins, who has written for Kylie Minogue (pictured)
‘The big thing would be to dispose of less attractive catalogues in the portfolio and give a meaningful return to shareholders’, said Solomon Nevins, portfolio manager at CCLA, a top-ten shareholder with a 4.9 per cent stake.
‘Where the shares are trading today, there must be something in the portfolio that makes sense selling, to buy shares back.’
Since it was launched five years ago by Merck Mercuriadis, a former Iron Maiden manager, and Chic frontman Nile Rodgers, a long list of famous musicians have sold it their songwriting rights for big windfalls.
They include Neil Young, the Red Hot Chili Peppers, Chrissie Hynde, Fleetwood Mac’s Lindsey Buckingham and Brian Higgins, who has written for Kylie Minogue and Girls Aloud.
It was reported that HSF had been in talks with at least one bidder who could buy some assets.
Mercuriadis said he would ‘do whatever was necessary’ to deliver value for investors, when asked in December if he would consider selling any catalogues.
Although the fund reaped the rewards of low interest rates when it launched, rising rates have stemmed momentum.
The ailing share price means it cannot raise cash to buy more catalogues without diluting existing shareholders.
HSF is owned by Hipgnosis Song Management, which is owned by US private equity giant Blackstone.
Hipgnosis Song Management also owns a separate fund, Hip Songs Capital, which has bought the catalogues of singers including Justin Bieber and Justin Timberlake.
HSF declined to comment and will today post its financial results for the year to March 31.
It is hoping to cash in on a continued rise of music streaming platforms.
In October, it announced a new debt financing package, with a revolving credit facility of £539million, which will run until the end of September 2027.
