Blackstone and Hipgnosis Song Management have formed a new investment partnership, backed by funds managed by Blackstone.
The venture will initially deliver around $1 billion to acquire music rights and manage catalogues.
Hipgnosis Song Management, founded by Merck Mercuriadis, has been making waves in the last few years. It is the largest UK-listed investor in music catalogues and royalties with gross assets of $2.2 billion.
As part of the partnership, Blackstone will take an ownership stake in Hipgnosis and will support the expansion of its infrastructure and business functions, including the development of new song management expertise, data science capabilities and technology solutions. This is designed to allow Hipgnosis to further enhance the value of the rights it purchases, working in close collaboration with songwriters, artists and producers.
Merck Mercuriadis, CEO of Hipgnosis Song Management, said: “Hipgnosis Song Management has firmly established songs as an asset class. This new partnership with Blackstone will deliver financial strength to invest in proven songs as well as grow our song management team and bring additional sophistication to HSM, enabling us to create greater value to our stakeholders including our songwriters and shareholders in SONG [Hipgnosis stock exchange listing]. Given the strength of our pipeline, we see the initial commitment as just the start of a long-term partnership between Blackstone and Hipgnosis that will also include co-investment with SONG.”
Qasim Abbas, senior managing director, Blackstone Tactical Opportunities, said: “This partnership underscores the long term, sustainable value we see in creative content across the wider entertainment industry, building on Merck’s vision and dynamism. The music industry has been at the forefront of the fast-growing streaming economy and is unlocking new ways of consuming content. We look forward to working with Merck and his team to continue their exciting journey and safeguard the legacy of the songwriters that entrust us with their content.”
Hipgnosis is expected to benefit from Blackstone’s investment in HSM’s management capabilities and will have the right to co-invest in future catalogue acquisitions alongside the new Blackstone–HSM partnership.
Andrew Sutch, chairman of Hipgnosis, said: “Our Investment Adviser, Hipgnosis Song Management’s, new partnership with Blackstone highlights how successfully Merck has established songs and music rights as an asset class since founding and listing SONG three years ago. This new partnership will provide new co-investment opportunities for SONG, and we expect that continued investment in Hipgnosis Song Management will enhance returns for our investors.”
Blackstone was advised on the transaction by Goldman Sachs, FTI, Kirkland & Ellis and Deloitte. Hipgnosis Song Management was advised by RBC, Capstan Capital Partners and Stephenson Harwood.