Following the drama at Hipgnosis in recent months, a key change in leadership has been revealed today.
Merck Mercuriadis, founder and CEO of Hipgnosis Song Management since its creation, is to be appointed chairman. Ben Katovsky, HSM’s president and COO, will be appointed chief executive officer.
It follows a tumultuous period in which shareholders voted against Hipgnosis’ attempt to secure a further five-year mandate for the investment trust.
Following that vote in October and a shake-up of the board, there has been pressure piled on Hipgnosis Song Management – the investment fund’s adviser – headed, until today, by Mercuriadis.
The board has expressed concern that the company is undervalued. There is also the contentious call option that Mercuriadis and his backers have on acquiring the investment fund in the event that their advisory agreement is terminated.
Earlier this month, the board of the music investment company called for an extraordinary general meeting for shareholders in order to vote on a surprise proposal to pay £20m to prospective bidders. It has been suggested that the call option is a deterrent to any bids, hence the offer of payment to cover costs for an interested party.
The latest move is from Hipgnosis Song Management, with Mercuriadis stepping back from the executive leadership but continuing to be responsible for engagement with songwriters, artists and the music industry. That continuation could serve to reassure all those songwriters concerned that, in the event of new ownership, their catalogues would be entirely in the hands of some unknown corporate or financial entity (assuming that HSM investment advisory role continues for the long term).
It now remains to be seen how the board and chairman Robert Naylor responds to the announcement from Hipgnosis Song Management.
“As a matter of prudence, we have requested the board of Hipgnosis Songs Fund to approve the planned transition of Merck’s role,” noted a statement that seems designed to placate the board and, perhaps, bring an end to corporate hostilities.
Following the changes, Mercuriadis will also generate opportunities to increase consumption and enhance the value of HSM’s client’s portfolios, lead acquisitions and advocate on behalf of songwriters, artists and HSM.
Ben Katovsky will assume responsibility for executive management of the business, implementing Hipgnosis Song Management’s strategy to “build on the company’s position as the premier platform for acquiring and managing song assets”, said a statement.
“He will ensure HSM delivers a high quality, value adding service to HSM’s clients and their shareholders,” added the statement from Hipgnosis Song Management. “Ben has extensive experience of building, leading and growing music companies as well as implementing strategies to increase the value of music catalogues.
I am proud to be asked to lead HSM through its next chapter, building on all Merck has achieved
Ben Katovsky
Merck Mercuriadis, chairman, Hipgnosis Song Management, said: “One of our most important goals has been to bring an institutional rigour to Hipgnosis Song Management. Over the last 16 months, Ben has done an amazing job building the team and HSM’s capabilities to deliver the best possible service to our clients and I’m certain this appointment makes us stronger.
“Having invested almost $3 billion on behalf of our clients in extraordinarily successful songs we are at an important juncture in our development where the services we provide to our clients are of paramount importance. Our commitment remains stronger than ever.
“We look forward to continuing our work with songwriters and the creative community to create the greatest possible opportunities from the iconic and culturally important songs which we manage on behalf of HSM’s clients.”
Ben Katovsky, CEO, Hipgnosis Song Management, said: “I am proud to be asked to lead HSM through its next chapter, building on all Merck has achieved. In my time in the music industry I haven’t come across anyone who can match his rapport and relationships with songwriters and artists.
“HSM has two clients, which we are proud to service, and shareholders who are clear in their vision, ambition and on-going commitment to grow music as an asset class through HSM. I am confident that HSM is already the best platform for both capital deployment and song management to create value from the songs that we manage. I am excited to have this opportunity to take it to the next level in its evolution.
“I look forward to continuing to work closely with Merck, our senior leadership team, my colleagues, our songwriters, our clients and shareholders. I particularly hope we will be able to work constructively with the board of Hipgnosis Songs Fund, as I believe that HSM is best able to deliver value for their shareholders whether they decide the company has a future as a long-term operation or wish to pursue the sale of assets following their strategic review.”
Qasim Abbas, senior managing director, Blackstone Tactical Opportunities, said: “Merck’s commitment to representing songwriters drives everything that he does – he is a great business partner and I look forward to working with him in his role as chairman.
“Ben is an impressive leader with significant operational expertise and sector experience. He has the support of a strong senior management team behind him, together focused on delivering the highest standard of service to HSM’s clients.
“Our partnership with HSM is testament to our conviction in the long-term value we see in Songs as an asset class, and we are excited about the future.”
Following the planned transition, Mercuriadis and Katovsky will continue to be directors and members of the board of Hipgnosis Song Management.
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