Publishing

Blackstone Officially Announces $1B Investment in Music Assets With Hipgnosis

Merck Mercuriadis
Joshua Blanchard/Getty Images for Billboard

Merck Mercuriadis attends the 2020 Billboard Power List Event at NeueHouse Hollywood on Jan. 23, 2020 in Los Angeles.

Under the deal, Blackstone will take an ownership stake in Hipgnosis Song Management and support its expansion.

Following reports last week that investment firm Blackstone was entering a new $1 billion partnership with Merck Mercuriadis, the companies made an official announcement on Tuesday (Oct. 12) announcing the deal.

Through the new partnership, funds managed by Blackstone will contribute $1 billion to acquire music rights and manage catalogs in tandem with Hipgnosis Song Management (HSM), formerly known as The Family (Music) -- the investment advisor to the publicly-traded Hipgnosis Songs Fund, which Mercuriadis founded and for which he also offers up music assets for the fund to buy. Under the deal, Blackstone will take an ownership stake in HSM and support the expansion of the company’s infrastructure and business functions, “including the development of new song management expertise, data science capabilities and technology solutions,” according to a press release. In addition, Hipgnosis Songs Fund will have the right to co-invest in future catalog acquisitions alongside Blackstone and HSM.

Mercuriadis said the partnership “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 Hipgnosis Songs Fund. He added that he views Blackstone's initial $1 billion commitment as “just the start” of a long-term partnership.

Sources previously told Billboard that Mercuriadis has been considering turning to private equity funding for months, as his fundraising from the stock market has fallen short of goals.

In his own statement, Qasim Abbas, senior managing director at Blackstone Tactical Opportunities, emphasized private equity’s increasing attraction to music assets, stating that the new partnership “underscores the long term, sustainable value we see in creative content across the wider entertainment industry.”

The deal shortly follows the announcement of Sherrese Clarke Soares' new HarbourView Equity Partners investment firm backed by a reported $1 billion from Apollo Global Management. (Clarke Soares was previously CEO and co-founder of Tempo Music and before that managing director at Morgan Stanley.) As well, on Friday, Billboard broke news that Kobalt was seeking a $1 billion buyer Kobalt Music Royalty Fund II, possibly with a group of investors that includes private equity firm KKR.

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.

Over the past several years, Blackstone has been building a portfolio of music assets that includes MNRK Music Group (formerly eOne Music), which it acquired in April, and the SESAC family of companies that also comprises the Harry Fox Agency and Audiam.

With gross assets of $2.2 billion, Hipgnosis Songs Fund's lucrative portfolio includes works by Neil Young, Al Jackson Jr., The B-52's, Blondie, Journey, Lindsey Buckingham, Steve Winwood and Tricky Stewart, among many others.