Music: The acquisition of Round Hill revives the song rights market

Published on September 11, 2023 at 6:23 p.m.

This is a major transaction for the music rights market. Alchemy Copyrights, also known as Concord, will buy for $469 million (437 million euros) the Round Hill Music (RHM) fund, whose rights portfolio includes cult Backstreet Boys songs, certain “hits ” of the Beatles or the unforgettable “What a Wonderful World” by Louis Armstrong.

Under terms of the deal announced Friday, Alchemy is offering $1.15 a share to take over rival RHM.Following a “takeover scheme” governed by Guernsey law, the transaction must obtain the approval of a qualified majority in a vote of its shareholders. But it has already obtained the unanimous support of the RHM board of directors and the irrevocable commitment to contribute their securities from investors representing 33% of its capital. If the offer succeeds, operation should be completed for the 1er November, leading to a delisting.

Stock market reaction

Already, the “deal” seems to be favored by the markets. Heckled since its first listing almost three years ago, RHM stock has climbed 64% on the London Stock Exchange while Hipgnosis , the largest of these “alternative” funds targeting music rights, grew by 16%. Even if the acquisition of Round Hill by Alchemy takes place at a discount of 11.5% on the net et value of its et portfolio (Net et Value, or NAV), the offer represents a premium of 67% on the last price of Round Hill on Thursday.

A fairly flattering redemption price when you know that inflation and rising interest rates weigh on valuations funds specializing in song catalogs. Mounted in recent years to surf the rise of music streaming and compete with the majors to capture the bonanza of rights-related revenue, funds have multiplied.

150,000 songs

The Round Hill fund manages the rights to over 150,000 songs. For its part, Concord Music has also been very active in recent years. since 2015 has invested more than $2 billion in approximately 100 transactions in recorded music, music publishing and concerts.

At 49 years old, Josh Gruss, the founder of Round Hill Music, should receive a nice jackpot. This former financial analyst at Bear Stearns, introduced this investment fund bought by Concord to the London Stock Exchange in November 2020. A 3.15% shareholder, he should pocket $15 million, according to Bloomberg calculations. According to RBC analysts, the operation around Round Hill is a sign of good health for any music rights market and could therefore indirectly benefit its rival Hipgnosis.

But there is still a long way to go. ociated with the investment giant Blackstone in one of its funds and despite a catalog including several music stars like David Guetta Shakira and Justin Bieber, this British publisher recently reduced its discount but its stock market shares are still moving with a discount of more than 30% on the estimated value of its catalogs.

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