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Hipgnosis aims to raise £150m to buy more of ‘most influential songs of all time’

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Hipgnosis, the firm that offers investors the chance to make money from the royalties of popular songs by artists from Barry Manilow to Beyoncé, wants to raise £150m to allow it to acquire more music.

The London-listed music investor, which earns royalties every time one of the 65,000 songs to which it owns the rights is played, said it intends to use the money to buy more of “the most influential and successful songs of all time”.

Related: ‘Record companies have me on a dartboard’: the man making millions buying classic hits

The company said it would issue 124m new shares, at a price of 121p a share, which represents a 2.4% discount on the prior day’s closing price.

Hipgnosis has been on a buying spree in recent months, including a 50% share in Neil Young’s song catalogue, as well as the purchase of catalogues belonging to the former Fleetwood Mac guitarist Lindsey Buckingham and the super-producer Jimmy Iovine.

The investment firm listed on the stock market in July 2018, and has completed a series of cash calls in recent months, which it has spent on acquiring the intellectual property rights to songs by artists such as Mark Ronson and the group Blondie. It has already raised more than £500m since July 2020, when it completed its largest equity raise to date of £236m, in excess of the £200m it had targeted.

Hipgnosis spent $1bn (£710m) buying 84 new song catalogues during 2020, and said it had benefited from an increase in streaming at a time when the pandemic closed down live music events, which pushed its annual profits to $107m.

Merck Mercuriadis, the founder of Hipgnosis Songs Fund, and a former manager of artists including Elton John, Guns N’ Roses and Beyoncé, said songs had been established as “one of the most attractive new asset classes”.

Mercuriadis suggested this fund raise would be the last for Hipgnosis for some time. “This raise gives our public markets investors, historic and new, the only chance for the next 12 months to get access to Hipgnosis’s existing portfolio as well as a pipeline comprising some of the most important and successful songs of all time, at valuations that are highly attractive, considering the continued explosive growth of streaming that will magnify future revenues considerably,” he said.

Mercuriadis’s prediction comes as figures showed that growth in streaming has pushed the value of the UK music industry’s overseas exports above half a billion pounds for the first time.

British music generated almost £520m in export earnings in 2020, according to the trade body the British Phonographic Industry, 6% higher than the previous year and the highest level in the two decades since records began.

The success of artists such as Dua Lipa, Harry Styles and Ed Sheeran has helped the UK to become the second largest exporter of music in world after the US, while one in 10 of all tracks streamed globally are by a British artist.

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