Hipgnosis Songs, the London-based music IP aggregation company, has raised an additional £231 million ($295 million), bringing its total funding tranche to a whopping £800 million ($1 billion). The funds will be used to continue the company’s aggressive acquisitions of music rights, including entire publishing companies and production houses.
This latest announcement comes hot on the heels of Hipgnosis’ enormous acquisition of Timbaland’s catalog, which reportedly came with an insane multiple over net publishers share (NPS). The company’s strategy is based on founder Merck Mercuriadis’ belief that songs are “better than gold or oil” in terms of their financial stability and growth prospects.
In a statement about the latest funding raise, Mercuriadis reiterated his catchphrase, stating that songs are “the currency that makes the world go round” and that Hipgnosis has “lined up the finest available song catalogs and will be deploying immediately.”
The funding raise came via the issuance of 231 million C Shares, priced at £100 each. The raise was facilitated by Nplus1 Singer Advisory LLP and J.P. Morgan Securities PLC. The fact that the raise was successful in the shaky, pre-Brexit British market is a testament to the hyper-growing music industry, with IP and publishing assets spiking in value.
Hipgnosis’ bullishness is reportedly entering brand-new territory, with the company preparing to purchase entire publishing companies, production houses, and other related entities. While this is undoubtedly good news for anyone with a valuable catalog, it’s not a game for conservative or even moderately aggressive players.
The company’s strategy is predicated on the belief that long-term valuations will ultimately exceed the offers made for music rights, allowing Hipgnosis to reap significant profits. So far, the company seems to be easily beating other bids from competing IP aggregators.
The music industry is experiencing a resurgence in value, with music rights and publishing assets becoming increasingly valuable as the industry continues to grow. Streaming services like Spotify and Apple Music have helped to drive growth in the industry, with revenues from streaming accounting for more than half of the industry’s total revenue.
Overall, Hipgnosis Songs’ latest funding raise is a clear sign that the company is doubling down on its aggressive acquisitions strategy. The company’s belief in the long-term value of music rights and publishing assets is certainly paying off, and it will be interesting to see what other acquisitions the company makes in the coming months and years.
However, there are those who are skeptical of the company’s strategy, pointing out that the valuations being placed on music rights could ultimately prove to be unsustainable. The music industry has a history of boom-and-bust cycles, and it remains to be seen whether the current resurgence in value is sustainable over the long term.
Despite these concerns, Hipgnosis Songs is forging ahead with its acquisitions strategy, and the company’s success so far suggests that it is onto something. As long as the music industry continues to grow and evolve, there will be valuable music rights and publishing assets to be acquired, and Hipgnosis seems well-positioned to capitalize on this trend.
Whether the company’s bullishness will ultimately pay off remains to be seen, but for now, it seems that the company’s aggressive acquisitions strategy is paying dividends. As the music industry continues to evolve, it will be interesting to see how Hipgnosis Songs adapts and grows to take advantage of new opportunities.
