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Blackstone has agreed to acquire Hipgnosis Songs Fund for almost $1.6bn, the latest salvo in a bidding war for the troubled group that pioneered efforts to turn music rights into a mainstream asset class.
The board of Hipgnosis said on Monday that it was backing a cash offer from Blackstone of $1.30 per share, up from the buyout firm’s initial proposal of $1.24 a share made last week.
Blackstone has been battling for Hipgnosis with Apollo-backed US investment group Concord. Concord’s latest offer valued Hipgnosis at $1.5bn and had won the support of the board of Hipgnosis, which owns a large portfolio of music including the Red Hot Chili Peppers and Shakira.
Announcing the deal, Qasim Abbas, a senior managing director at Blackstone, said: “The breadth of the Blackstone platform, combined with our operational expertise, will support and enhance the value of the acquired rights.”
Founded by Merck Mercuriadis in 2018, Hipgnosis was at the forefront of attempts to transform music rights into a mainstream asset class as investors sought out higher returns during the era of low interest rates.
However, the appeal of music rights has been hampered by higher interest rates, which pushed up the “discount rate” that is used to calculate asset values into the future, cutting song right valuations.
Blackstone already has deep ties to Hipgnosis. The New York-based firm bought Mercuriadis’s management company in 2021 and set up a separate $1bn fund to buy song copyrights.
Blackstone also owns a controlling stake in Hipgnosis Songs Management, which collects fees for managing the listed Hipgnosis fund.
