Hipgnosis Songs Fund Limited - SONG

Another day, more questions. They knew the outcome of CRB III in July 2022, and it was upheld this summer. How they’ve mistated accrued income by over £10m and then not even had the wiggle room to pay a single quarter dividend is beyond me.

The cynic in me sees management and the not-so “independent” valuer realising they are about to lose the continuation vote…


It does seem something of a shambles.

I’m glad I never invested in this one: it seemed a semi-sensible idea at one point from a diversification and income perspective.

In the end, I decided I don’t know enough about royalties to be confident enough to buy.

Very similar to rehpot where I was tempted to open a small position here but had a few concerns so decided not to.

I remember reading a post on another forum some time back that a person working in the industry thought hipgnosis were paying way over the odds for the albums/portfolios they were acquiring…maybe there was some truth in it!

Seems like I made the right choice in hindsight offloading these last year - whilst I loved the idea of investing in something which didn’t move in sync with financial markets and economies, there was something about its model I wasn’t comfortable with, streaming rights with spotify etc.


Glad I offloaded at a slight loss a few weeks ago when the price had a bounce due to the Round Hill deal announcement.
I am a firm believer in music royalties as an investment. Publishing is where a large slice of the money is in the music industry.
Hipgnosis and Round Hill struggled to get investors to believe the valuations.
Hipgnosis is being let down by financial opaqueness . I’ve lost trust in the company in its current form.
I’ll be back in Hipgnosis if major changes are made to how it’s run (in other words, severed from the Blackstone conflict of interest)


Confirming my thoughts, no one in the music industry has any clue why Hipgnosis’ CRB adjustment was so wrong, so it’s just plain mismanagement or worse, deliberate inflation of NAV to increase the management fee.

Thankfully, large shareholders are making good noises about discontinuation and changes in management so hopefully we get what’s required to right the ship.


The company’s credibility appears to have evaporated .

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Hipgnosis shareholders vote against continuation of UK-listed music investment trust - Hipgnosis shareholders vote against continuation of UK-listed music investment trust

83% vote for discontinuation, hopefully the beginning of more positive shareholder returns.

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So a more reasonable valuation at $1.74-2.00bn. 92p NAV, 16x multiple at a discount rate of almost 10%.

Discount reduces from over 50% to 39%. A lot of that is probably pricing tax/transaction costs from a sale.

Operative NAV is around $1.1b, against debt of $600m, which is way higher than the covenant limit of 40%. At $120m annual income, we’re looking at 12 months until dividends can resume.

Further commentary

Some positives:

  • The 16x multiple is lower than Universal recently bought a share of a very close peer to HSF. That was at a 17x multiple, 6% more than the recent valuation (or equivalent to 97.5p).
  • The $440m Blackstone deal was actually not at such a large discount as it seemed given the lowered NAV. It looks like a 20% premium but the article only briefly mentions the active/passive split. You can bet Blackstone and Merc where trying to escape with high quality active catalogues so I reckon the actual assets were worth $400-450m. Not a useful benchmark anyway given the self-interest. I’m glad the company didn’t part with quality assets as it would have materially impacted it’s earnings visibility, debt conditions etc.
  • The lowered NAV makes it more likely Blackstone/Mercuriadis purchase HSF at its new valuation or higher if someone else is interested. The new board is incentivising other bidders with £20m upfront so I think it is highly likely HSF is acquired at its NAV of 92p at the very least. This NAV will also increase once HSF repays debt.
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Up 31% today after all cash offer at 92p from Concord. Surprising it was made so quickly but could have seen the hint with former Round Hill directors joining (that fund was also bought by Concord). Total return is around 0% for most people, unless you bought right after IPO or during 2021 peak.

Small chance of another bid around 95ish so I’m holding for now.

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Bought at £1.15. Great idea/ awful execution


Very interesting scoop by Sky. Apparently Blackstone has already made several bids, and are considering beating Concords’ offer. Given the legal disputes between the Blackstone-owned advisor and how their offers have been overlooked by the HSF board, it seems unlikely that they get a recommended offer. But Blackstone could start soliciting shareholders with a higher price, which in turn may force the board to go to Concord and ask for a higher bid. That would also reduce the risk Blackstone triggers the call option to gazump the deal anyway.

It’s certainly not over yet!

Edit: Blackstone seems to have made an offer for $1.24/£1. Popcorn?


And Blackstone reply: watch this space.

Hotting up :fire:

I had a message from free trade about hipgnosis being sold but I clicked off it before reading it all .
Now I can’t find the message. Does anyone know what it said?

Click on the person icon in the top right
Then click on chat with us
Then you can see your messages.
It’s a bad bit of the UI that :freetrade: have never improved imo