Former Beyoncé manager & Hipgnosis Songs Fund founder likens hit songs to gold and oil

Hit songs have always been the primary currency of the music industry.

In its first financial results since floating on the London stock exchange 10 months ago, IP investment company Hipgnosis Songs Fund has generated revenues of £7.2 million (A$13.1 million).

The startup has also just revealed that Australia is one of its significant music markets.

Hipgnosis reported that of publishing revenue, 64% came from the US, 15% from the UK and 4% from Australia.

Founded by former Beyoncé and Guns N' Roses manager Merck Mercuriadis, Hipgnosis offers investors pure-play exposure to songs and associated music IP rights and has raised over £200 million ($366 million) in oversubscribed fundraising.

Between June 2018 and March 2019, it owned fully or partial stakes in 12 catalogues.

These make up 3,096 songs in total and were acquired for £120 million ($219.6 million) and are now worth £128 million ($234.2 million), driven by increasing streaming revenues and improved sync placement.

In this period, its net asset value grew 4.6% from 98.74 to 103.27p per share.

Since the end of March, it acquired 10 more catalogues, bringing its total spending to date to £241 million ($440.9 million) and total catalogue holdings to just under 6,000 songs.

Clients include songwriters and producers Bernard Edwards, Dave Stewart, The-Dream (co-writes of Justin Bieber’s ‘Baby’ and Beyonce’s ‘Love On Top’), Tricky Stewart (the last two were responsible for Beyonce’s ‘Single Ladies’ and Rhianna’s ‘Umbrella’, Poo Bear and Teddy Geiger.

The biggest sync revenue-creator was the 290 songs by Bernard Edwards (in which it has a 37.5% stake) and earned over US$1 million.

Hipgnosis anticipates an increase in revenues from other developed and emerging market countries as streaming services expand in those markets.

Says Mercuriadis, "Hit songs are as predictable and reliable and therefore investable as gold or oil.

“We had access to those proven hit songs and the value of them was going to grow significantly in line with the consumption of music thanks to streaming.

"Every day, there is more evidence to back our thesis."

According to an MBW report, “We now have a pipeline of catalogues with an aggregate value in excess of £1 billion ($1.8 billion).

“At £1 billion, we will be 18 or 19 per cent of global publishing.

“At that point, we will have the critical mass to effect the change.”

Hipgnosis is currently performing due diligence on a "significant number of new catalogue acquisitions" worth a combined value of £146 million ($267.2 million) which it is looking to complete by the end of July 2019.