Kobalt Sells Majority Stake to Francisco Partners
Willard Ahdritz will remain as chairman of the independent publisher.
Kobalt has announced plans to sell a majority stake to Francisco Partners, the tech-focused investment firm. Financial details of the arrangement were not disclosed, with the company noting that Dundee Partners and Matt Pincus’ MUSIC were also investing in Kobalt.
The company’s core management team — CEO Laurent Hubert, president and COO Jennette Perez, CFO Catrin Drabble and CTO Nuno Guerreiro — will remain unchanged, and founder Willard Ahdritz continues as Kobalt’s chairman of the tech-centric independent publisher.
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“For over 20 years, Kobalt has been a music leader with technology as a core part of our focus, and I can’t think of a better investor than Francisco Partners to back our vision and invest deeply in our ambitious technology development and creator services,” commented Ahdritz in a press release.
The sale is subject to regulatory approval. Goldman Sachs served as financial advisor to Kobalt, and Raine Group served as financial advisor to Francisco Partners.
The news of additional business changes comes six months after Billboard published an in-depth break down of the financials behind the company’s first profitable year in its 20 year history, after 19 years of negative $318.49 million in retained earnings.
In fiscal year 2020 and 2021, the company made some major changes. For one, Kobalt Capital sold two investment funds that owned music assets on behalf of institutional investors for $1.4 billion. Fund 1 sold to Hipgnosis Songs Fund for $323 million, realizing a $20 million gain for Kobalt. The other fund sold for $1.1 billion to KKR and Dundee Partners.
In addition, the company sold off AWAL and its neighboring rights operations to Sony, allowing the company to pay down all debt and it finished the year debt free and with $315 million in cash. However, with the $315 million in cash being a cash flow-positive company, Kobalt produced $35.2 million in operating cash flow in fiscal 2021.
In the last few years, Kobalt has received a number of awards for its administration-focused publishing operations, including ASCAP’s Latin Independent Publisher of the Year, BMI’s Gospel Publisher of the Year and BMI’s Hip-Hop/R&B Publisher of the Year. Also, Kobalt consistently ranks in the top four music publishers in Billboard’s Music Publishers Quarterly, which measures publisher’s market share by their percentage of the top 100 radio airplay songs and the Hot 100 for the quarter.
In a written statement in March, following the release of Kobalt’s financial details, Ahdritz said, “These milestones have paved the way for our third act: removing the frictions and spillage in the last mile of paying songwriters and rights holders with AMRA, our global digital society. With the strong growth in multi-territorial music services like Spotify and Apple as well as new segments in health and fitness, I believe AMRA is much needed in the industry, and it will be our biggest innovation to date. As we embark on this next act, I’m proud of our leadership team and our entire staff as we are well-positioned for future success.”
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