Founded in 2018 by Merck Mercuriadis, Hipgnosis Songs Fund Ltd is a Guernsey- based first UK investment company engaged in delivering a pure-play exposure of songs and associated musical intellectual property rights to the investors. The company aims to build a diversified portfolio of acquired catalogues of hit songs of cultural importance globally. Its shares got listed on the Main Market of the London Stock Exchange in July 2018 as LON: SONG, and in 2019 it got transferred to the premium segment of the Main Market. Since March 2020, it is the constituent of the FTSE 250 Index. As of 31 March 2021, the company has 138 catalogues and 64,098 songs in its portfolio with different Genre such as Pop, Dance, Rock, R&B, Hip-Hop, Country, Latin, Disco, Soul and Christian. Its income comes from a range of sources, which include mechanical/ master royalties, performance, synchronisation, streaming, digital and others.
The company has appointed the Family (Music) Limited as its investment advisor, which was founded by Merck Mercuriadis and its advisory board consist of various highly successful music industry experts who have deep knowledge of music publishing. The company invests in the diversified portfolio of songs and associated musical intellectual property rights to reduce risk with a motive to deliver high and attractive capital growth and return to its shareholders. In an appropriate case, the company fully acquires a songwriter’s copyright interest with writer shares, publisher shares and performance share in each song or it may not acquire all three elements. It may also acquire interest sole authored or co-authored and in songs jointly acquired with another purchaser. Further, it may directly or indirectly come into a licensing agreement through which it may receive royalties, licence fees and/or advance payments for its copyright interest and master recordings. The master recording may generate income as Synchronisation royalties and through sales of physical record, DSPs, and digital downloads. The company may also acquire the entity to acquire its held song or catalogue directly or indirectly and it does not sell its owned songs but can dispose.
With a motive to diversify risk and maintain high-quality diversified portfolio of songs the company has to follow some investment restrictions such as, its portfolio should consist of minimum 300 songs, at the date of relevant advance the acquisition of rights over future song should be minimum of 5% of its gross assets, a single song should represent maximum 10% of the company’s gross assets at the time of acquisition and it can’t invest in the closed-ended investment funds or company. In addition, the company may use hedging instrument for efficient management of portfolio, and it may use 30% of its operational net assets value as leverage.
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