Hipgnosis, the acquisitive music publishing company, has set a price for an issue of new shares to raise an unspecified amount that it has earmarked for new deals within three months of getting the money.
The London-listed company has raised and spent £1.2bn on the rights to hit songs since it floated in 2018 and has been on a buying spree, having struck deals with Neil Young, Jimmy Iovine, Shakira and Lindsey Buckingham so far this year.
Hipgnosis said on Thursday that it had also bought the rights to music producer Bob Rock’s catalogue comprising 43 songs. He is best known as the producer of Metallica’s eponymous album that broke the thrash metal act into the mainstream with singles including Enter Sandman and Sad But True. Songs from the album, released 30 years ago, have been streamed 7bn times. The catalogue also includes Mr Rock’s work with Canadian crooner Michael Bublé.
The company said it would issue new shares at a price of 121p to fuel more purchases but declined to say how much it intended to raise.
It said it would spend the money it raised via the placing within three months of the new shares being admitted, having noted in December that there was a “pipeline” of acquisition opportunities with a value of £1bn.
The placing price is pitched at a 1 per cent discount to its closing Wednesday share price. It reflects a decrease in its net asset value of 6.78p since the end of September, which Hipgnosis attributed to a strengthening of the pound against the dollar between then and January. It also said that price reflected unaudited accrued earnings and dividend payments from the past three months. Shares traded roughly flat following the announcement at 122.2p.
The music company, founded by former Elton John manager Merck Mercuriadis, has been one of the most active buyers of the rights to songs over the past year.
Bidders ranging from private equity funds, specialist buyers and music labels have vied for the back catalogues of famous artists and songwriters as a boom in streaming has increased the value of older songs that are still listened to billions of times.
However, analysts at Stifel recently raised concerns over how Hipgnosis values the songs it has acquired, because there is little financial information provided when it strikes deals because of non-disclosure agreements with artists.
Numis has also said it is difficult to make a detailed financial assessment of Hipgnosis given the lack of financial detail surrounding its acquisitions. “Hipgnosis has been highly acquisitive and built a significant market position in the sector in a short space of time, and in the long term it will be key for the fund to demonstrate how cash flows from acquisitions compare to modelled expectation,” analysts wrote in a note.