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Hipgnosis Songs Fund has delayed the discharge of its first-half outcomes after the music rights proprietor expressed concern over the worth of its belongings.
The London-listed group mentioned on Tuesday a valuation it had acquired from an impartial valuer was “materially increased” than that implied by current offers within the music rights business.
After consulting Hipgnosis Track Administration, which helps handle the listed music fund, it determined to push again the publication of its first-half outcomes. It now expects to publish its outcomes by the tip of December.
Hipgnosis Songs Fund was based by former band supervisor Merck Mercuriadis in 2018, who sought to show music rights right into a mainstream asset class through the period of low rates of interest. Nonetheless, increased rates of interest have pushed up the “low cost fee” that’s used to calculate asset values into the longer term, chopping track proper valuations.
The choice to delay the outcomes is the newest blow to Hipgnosis, whose shares have fallen by a fifth this yr and had been down 3 per cent in early buying and selling on Tuesday.
The corporate already faces doubts over its future after buyers rejected its try and safe an extra five-year mandate in October.
In an announcement on Tuesday, Hipgnosis Songs Fund mentioned “the valuation the corporate acquired from its impartial valuer is materially increased than the valuation implied by proposed and up to date transactions within the sector”.
It highlighted a proposed $417.5mn transaction to promote a big portfolio of its music rights to a fund owned by personal fairness group Blackstone, representing a reduction of 24 per cent to the portfolio’s valuation on the finish of March. That deal was blocked by buyers in October. It additionally pointed to a sale this month that offloaded $23.1mn of non-core belongings at a 14 per cent low cost.
Hipgnosis mentioned the board had requested Mercuriadis’ Blackstone-backed Hipgnosis Track Administration, which manages the fund, for its view on the impartial valuation.
“Hipgnosis Track Administration Restricted finally offered an opinion, which was closely caveated, such that the board has considerations as to the valuation of the corporate’s belongings in its interim outcomes,” it mentioned.
The questions over the worth of its belongings highlights the strained relations between Hipgnosis’ board and Mercuriadis, a former band supervisor who’s now chief government of the fund’s funding adviser.
Final month, Hipgnosis mentioned it was trying to find a brand new auditor after PwC, which checked its books since 2018, refused to reapply for the job.