Why the Hipgnosis Drama Yielded an Unexpected Ending

For a tale as turbulent as the industry-shaking saga of Hipgnosis Songs Fund, the ending turned out to be surprisingly tame.

To recap, Hipgnosis Songs Fund (HSF) was the ambitious management company built on founder Merck Mercuriadis’ belief that songs could be investments that were as good as gold. The company busted out of the gate in 2018 with bountiful backing, an impressive debut on the London Stock Exchange and triple-A music catalog acquisitions with headline-grabbing price tags.

For a while, it seemed Mercuriadis’ dream of turning the music publishing industry into a place where everyone, especially artists, made lots of money was becoming a reality.

Today, the dream remains just that. On July 9, almost all of HSF investors voted to finalize the $1.6 billion sale to investment management company Blackstone. Mercuriadis, meanwhile, is out of the picture entirely after stepping down as chairman of HSF investment adviser Hipgnosis Song Management (HSM) earlier this month, just five months after stepping down as CEO. HSF will go private and be taken off the London Stock Exchange by the end of the month.

Despite appearances, this outcome is possibly among the better ones for HSF. Blackstone ended up paying $1.31 per share (£1.01 GBP) after a brief bidding war with Concord, which in turn gave HSF’s share price a healthy boost on the stock market (100 pence as of July 17).

By the time Shot Tower Captial’s strategic review kneecapped HSF’s valuation — from $2.62 billion to $1.95 billion, detailing how the company overpaid for most of its 105 acquisitions — the stocks were less than 70 pence per share. The silver lining for HSF shareholders is they’re at least going out on a high note they haven’t hit since 2022.

And considering the drama that has unfolded over the past several months, this ending is surprisingly smooth. HSM, which is majority owned by Blackstone, didn’t have to play Mercuriadis’ call option to block HSF from ending its contract early. There were also no lawsuits between HSF and HSM, which seemed increasingly on the table as the bad blood boiled.

Blackstone, of course, is the biggest winner here. Along with HSM and the private Hipgnosis Songs Capital fund, Blackstone now holds the whole Hipgnosis umbrella, under which are catalogs from Neil Young, Red Hot Chili Peppers, Justin Bieber, Shakira and many more.

The final sale comes less than a year after Round Hill Music Royalty Fund also went private after being bought by Concord. Mercuriadis may be right that great songs last forever in peoples’ hearts, but for now that remains to apply to the stock market.

Happy trails, Hipgnosis.