Just two weeks after it raised nearly $300m via the sale of C shares, Hipgnosis Songs Fund has increased the amount of debt it can access in order to continue its aggressive acquisition strategy.
UK-based Hipgnosis, which trades on the London Stock Exchange, announced earlier today (July 23) that it had secured an increase its Revolving Credit Facility from GBP £150m (circa $188m) to USD $400m.
The new deal has been agreed with the credit facility’s syndicated group of lenders, including JPMorgan Chase Bank as Lead Arranger.
The move to denominate funds in USD rather than GDP, said Hipgnosis, is a “partial natural hedge against FX movements as the majority (89% as at 31 March 2020) of [our] catalogs are acquired in US dollars and the majority of [our] income is received in US dollars”.
Hipgnosis also says the credit extension remains in accordance with one of its central agreements with investors – that the total indebtedness of Hipgnosis as a multiple of its Net Publisher Share (i.e. gross profit on royalties) must not exceed 4.5x.
Having already spent over $1bn on music copyrights and income streams, Hipgnosis told its investors earlier this month that its investment adviser – The Family (Music) Limited – is currently “in active discussions on a pipeline of catalogs with an acquisition value of over £1bn”.
Six days after making that announcement, Hipgnosis announced that it had acquired the catalog of Lady Gaga collaborator, RedOne, for an undisclosed fee.
Hipgnosis Songs Fund saw its revenues grow to £64.7m (approximately $81m at current exchange rates) in the 12 months to end of March 2020.
Hipgnosis founder and CEO, Merck Mercuriadis, said in the firm’s annual report, released on July 3: “When compared with the three major song companies [in the same annual period] we have achieved between 7% and 12.5% of their revenue on between 0.5% and 0.9% of their number of songs.”
Added Mercuriadis: “Our small catalog of 13,291 Songs, albeit with an extraordinarily high ratio of success within it, is earning £4,868 per song vs something less than £150 per song for our competitors.”Music Business Worldwide