Hipgnosis Songs Fund delays results as value of company’s assets thrown into question
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Hipgnosis Songs Fund, the embattled investment trust, has today delayed the publication of its results for the six months to 30 September following a dispute over asset valuations.
The company, which owns a catalogue of music royalties, including rights to songs from the likes of Shakira and the Red Hot Chilli Peppers, has faced growing criticism over the past year due to conflicts of interest between its founder, Merck Mercuriadis and other parties, as well as questions about the prices paid for songs.
In the latest instalment of the ongoing saga, Hipgnosis has now said the valuation it has received from its independent valuer for its interim results was “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.”
Hipgnosis Songs Fund proposed raising $417.5m earlier in the year by selling a catalogue of royalties to Hipgnosis Songs Capital – a private company owned by asset management giant Blackstone – at a discount of 24.3 per cent to the valuation of these assets as of 31 March 2023. The deal was later voted down by shareholders.
Then, in early December, it announced the sale of about 20,000 non-core songs for $23.1m, representing approximately 1% of its portfolio for a discount of 14 per cent to the latest valuation.
Merck Mercuriadis, as well as being the founder of Hipgnosis, is also the founder of the investment adviser, Hipgnosis Song Management (HSM), and holds a minority interest in Hipgnosis Songs Capital.
Following the update from the independent valuer, Hipgnosis Songs Fund, reached out to its investment advisor, HSM, which “eventually provided an opinion, which was heavily caveated.”
As such, the board has said it has “concerns as to the valuation of the company’s assets in its interim results.”
It is now planning to publish the results by the end of the year at the latest.