Just three months after Blackstone acquired the music assets of Hipgnosis Songs Fund (HSF) and folded them into Hipgnosis Songs Management (HSM), the hit catalog featuring the Red Hot Chili Peppers, Neil Young, Shakira and many more artists supports titles that the company hopes to raise $1.47 billion.
Lyra Music Assets is HSM's second asset-backed securitization (ABS), which allows a company to raise capital and pay interest with the royalties generated by the music and recorded music publishing rights of the catalog. The assets on that list, which Blackstone acquired from publicly traded HSF in July for $1.6 billion and folded into HSM, are now valued at $2.36 billion, according to the Kroll Bond Ratings Agency report. Proceeds from the securitization will be used to repay existing indebtedness, fund ABS's reserve account, pay transaction fees and promote general corporate purposes.
Acquired after a brief bidding war with Concord, the 45,000-song HSF catalog was built by the ground-breaking, London-listed royalty fund that launched in 2018 and raised about $2.2 billion to acquire music rights from dozens of classic artists and successful producers. In 2023, with HSF's share price struggling, investors voted for a strategic review that would weigh options to improve shareholder value. This review painted a devastating picture of HSF's operations and resulted in the sale of the fund's directory and the resignation of HSM's chairman, Merck Mercuriadisin July.
Throughout the drama, Blackstone ended up with a catalog of top artists including Rick James, Enrique Iglesias, Steve Winwood and Chrissie Hynde of the Pretenders, with tracks averaging around 19 years old. However, there are currently four lawsuits involving listed assets: the ongoing dispute with Barry Manilow over earnings provisions; a copyright infringement claim regarding Mariah Carey's “All I Want For Christmas Is You.” a dispute over co-production rights from Timbaland's recordings; and the so-called “dembow” lawsuit brought by Jamaican duo Steely & Clevie that claims more than 1,800 reggaetón songs illegally copied the beat on the duo's 1989 track “Fish Market.”
Lyra Music Assets is the latest in a series of music rights-based securitizations that allow music companies to use their vast catalogs to raise additional capital. As Bulletin board Noted earlier this year, securitizations have grown in popularity as listed royalty mutuals – HSF and Round Hill Music Royalty Fund – have fallen out of favor. HSM's previous ASB, Hipgnosis Music Assets 2022-1, was backed by nearly 1,000 songs from artists including Justin Timberlake, Nelly Furtado and Leonard Cohen. Concord floated an ABS in October that sought to raise $850 million and also did a $1.65 billion ABS due in 2022. Other firms to tap into the securitization market include HarbourView Equity Partners, Kobalt and Chord Music Partners.
