black stone Inc.
plans to invest $1 billion in acquiring music rights and managing catalogs, a move the asset manager says will benefit from the rapid growth of online streaming.
The investment is part of a partnership with a consultancy affiliated to Hipgnosis Songs Fund Ltd.
, a music investment company that trades on the London Stock Exchange. Hipgnosis, led by former pop star executive Merck Mercuriadis, buys song catalogs from artists and earns revenue when the music is streamed online or used in movies or advertisements.
By partnering with consultancy Hipgnosis, Blackstone hopes to capitalize on new ways fans are taking in music over the Internet. “The music industry has been at the forefront of the burgeoning streaming economy, unlocking new ways to consume content,” said Blackstone executive Qasim Abbas.
Bloomberg reported last week that Blackstone and the consultancy were in talks.
The Hipgnosis fund has the right to co-invest in the catalog assets of the new Blackstone partnership, the companies said. Blackstone will take an ownership stake in Mr. Mercuriadis’ consulting firm and will invest to enhance the company’s data and technology capabilities to help the partnership manage music rights more efficiently.
Hipgnosis has said its goal is to establish songs as an asset class. Mr. Mercuriadis, the founder, previously led singers such as Beyoncé and Elton John and bands such as Guns N’ Roses and Iron Maiden.
Hipgnosis went public in 2018. By June, it owned the rights to more than 64,000 songs, including nearly 14,000 top-ten hits. Neil Young, Journey, Fleetwood Mac and Mariah Carey are among the artists whose songs Hipgnosis has invested in.
The Covid-19 pandemic has caused people to increasingly use streaming to listen to classic songs, Mercuriadis said in June.
Other major asset managers have made similar bets on music rights, both by investing in other companies and acquiring rights directly.
Through its credit arm, Apollo Global Management Inc.
pledged last week to support HarbourView Equity Partners, a new company that plans to build song rights, with a $1 billion investment. The deal includes a combination of debt and equity that will be used to purchase assets, an Apollo spokeswoman said.
KKR & Co. Inc. took a majority stake in a pop song catalog from producer Ryan Tedder earlier this year. It has also partnered with BMG, a record label and music publisher, which would allow KKR to commit approximately $1 billion in music rights investments.
Hedge fund manager William Ackman bought a 10% stake in Universal Music Group this summer ahead of its spin-off as a publicly traded company from Vivendi SE.
He had previously attempted to invest in Universal through a special acquisition company he controlled, but the deal fell through under regulatory scrutiny.
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