A MUSIC fund that offers investors the chance to make money from Beyonce, Justin Bieber, Guns N’ Roses and Ed Sheeran royalties has hit a bum note after scrapping its dividend.
Hipgnosis Songs Fund, started by music agent Merck Mercuriadis and Chic legend Nile Rodgers, told shareholders it can’t afford to pay a dividend as income from its US song catalogues would be much less than expected.
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Shares in Hipgnosis tanked by 10.27 per cent yesterday to a record low of 66.31, after trading as high as 130p last year.
The fund has spent billions of pounds buying thousands of hits from the world’s biggest artists.
But it now expects to make $9.9million (£8.2million) from its songs this year — rather than the $21.7million (£17.8million) it thought.
It said paying the dividend could mean not having enough cash to comply with bank covenants.
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It comes ten days before a shareholder meeting on whether the fund should continue.
Tom Treanor, of Asset Value Investors, which owns a five per cent stake in Hipgnosis, issued a letter saying it would vote against the fund continuing and against its “tainted” sale of a catalogue of songs by Shakira and rapper Nelly to a rival also owned by Mercuriadis and the boss of Blackston.
Investors are concerned Mercuriadis has transferred the songs for a bargain price.
In May, Sir Rod Stewart added to unease by calling off two years of negotiations to sell his song catalogue to Hipgnosis.
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FRASERS DEALS AT DOUBLE
MIKE Ashley’s Frasers Group upped its stakes in Boohoo and Asos yesterday in an unusual double hit on the fast-fashion rivals.
Stock exchange filings showed Frasers increased its position in Asos from 19.6 per cent to 22 and in Boohoo from 13.4 per cent to 15.
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Boohoo, once worth more than Marks & Spencer, has lost 45 per cent of its value in the past six months and is now valued at £384.9million.
Asos is now worth £461million after losing 47 per cent of its value.
The online retailers have been burnt by rising costs and sliding sales as shoppers return to the high street after the Covid-19 pandemic.
Frasers owns a 22 per cent stake in online electricals retailer AO World and 13 per stake in its bricks and mortar rival Currys.
Insiders said the latest swoops were a continuation of Frasers’ strategy of seeking undervalued assets.
A BITTER PILL FEAR
THE Bank of England’s chief economist says there is “some work to do” on taming inflation, suggesting there could still be further interest rate rises.
Huw Pill yesterday said that it was “important that we do not declare victory prematurely”.
He said the Bank still had to do more to bring inflation down from 6.7 per cent to its target 2 per cent.
Money markets have priced in a 77 per cent likelihood that the Bank will hold rates next month at 5.25 per cent.
SLUMP RISK FALLS
THE UK is on track to avoid a recession this year as the economy proves stronger than expected, forecasters say.
Ey Item Club suggests the economy will now grow by 0.6 per cent, a rise on the 0.4 per cent originally estimated.
It also expects the Bank of England not to raise interest rates above 5.25 per cent.
But it foresees the economy only growing by 0.7 per cent in 2024, down from 0.8 per cent.
Martin Beck, at EY, said: “There have been enough positive developments to lift the mood music.”
WAR SPURS SHELL
SHARES in Shell hit record highs yesterday as traders nervously weighed the impact of the war between Israel and Hamas on the oil price.
Shell is worth £182billion now after its shares rose by 1.16 per cent to £27.50.
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Brent crude’s price has risen by more than 7 per cent since the conflict began and last week hit $90-a-barrel over fears of disruption to supply.
It fell yesterday when the US agreed to ease oil sanctions on Venezuela in return for it holding a monitored presidential election next year
