Edison Investment Research Limited
London, UK, 18 August 2021
Round Hill Music Royalty Fund (RHM): Initiation - Music and finance in harmony
Round Hill Music Royalty Fund (RHMRF) was launched in November 2020. Its fund manager, Round Hill Music LP, established in 2010, manages over $900m (at end June 2021) and is one of the largest global music asset owners, consistently a top 10 Billboard Top Publisher. RHMRF benefits from Round Hill's industry expertise and fully integrated business owning and exploiting music copyright assets. It focuses on mature catalogues (90% of its songs are over 10 years old) and high growth-potential master rights (c 23% of portfolio at June 2021). We believe RHMRF's assets to be high quality, with strong potential to provide reliable and growing revenues given the momentum in streaming and potential of new channels.
In our view, RHMRF has compiled a strong set of assets through its purchases of the Round Hill Fund One assets and the outstanding minority interest of the Carlin portfolio. We regard the prices paid as appropriate for the underlying asset quality, which is mature and well diversified by genre. RHMRF's revenues are set for strong growth, driven by the popularity of streaming and newer formats such as social media, gaming and fitness. The prospect of regulatory changes that are considerably more favourable to songwriters enhance the outlook further. The manager Round Hill (RHM LP) has generated a historical internal rate of return of over 17% (over the past 10 years) on its three private funds.
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