Archived article
Please note that tax, investment, pension and ISA rules can change and the information and any views contained in this article may now be inaccurate.
magazineHipgnosis seeks more money to buy music catalogues
HIPGNOSIS SONGS FUND (SONG) 118.73p
Gain to date: 2.8%
Original entry point: Buy at 115.5p, 18 June 2020
Investors in Hipgnosis Songs Fund (SONG) must get used to the investment trust coming back to the market on a regular basis to raise money as it has grand plans.
In the summer it said there was a £1 billion pipeline of potential acquisitions, namely music catalogues where it obtains the rights to certain songs and enjoys royalty payments when they are streamed, appear on the radio, featured in adverts, films or TV shows, or played in shops, restaurants or gyms.
It raised £236.4 million in July and eyes another £250 million by issuing new shares at 116p, a 7.9% discount to the market price before the fundraising was announced and a 3.6% premium to its adjusted operative net asset value.
The new cash will buy more music catalogues, guided for a blended acquisition multiple of approximately 18 times historic annual income. That’s much higher than the 14.3 times average multiple paid to date and perhaps indicative of how competition is growing in the royalty space and how artists are becoming wise to the opportunity.
SHARES SAYS: Hipgnosis is strengthening its asset base from which to generate income and we expect to see a sizeable increase in the company’s net asset value when the revaluation of its library (likely using a lower discount rate) is announced in December.
Important information:
These articles are provided by Shares magazine which is published by AJ Bell Media, a part of AJ Bell. Shares is not written by AJ Bell.
Shares is provided for your general information and use and is not a personal recommendation to invest. It is not intended to be relied upon by you in making or not making any investment decisions. The investments referred to in these articles will not be suitable for all investors. If in doubt please seek appropriate independent financial advice.
Investors acting on the information in these articles do so at their own risk and AJ Bell Media and its staff do not accept liability for losses suffered by investors as a result of their investment decisions.
