The publicly listed music rights owning Hipgnosis Songs Fund has delayed publication of its financial results for the six months to 30 Sep. The figures were expected to be published today, but have been pushed back because of board concerns about the valuation of the company's catalogues.
The board said in a statement this morning that the valuation provided by an independent valuer "is materially higher than the valuation implied by proposed and recent transactions in the sector". And that includes transactions proposed and undertaken by HSF itself.
HSF announced last week that it had sold a catalogue of 20,000 "non-core songs". That deal, the board notes, was worth $23.1 million, "reflecting a 14.2% discount to the valuation of these assets as at 30 Sep 2023".
HSF also negotiated a deal to sell a set of more valuable rights to the separate Blackstone-backed Hipgnosis Songs Capital for $417.5 million, "reflecting a discount of 24.3% to the valuation of these assets as at 31 Mar 2023".
Given what they had seen in recent deals in the music rights space, the board sought advice from its investment adviser, that other Hipgnosis entity Hipgnosis Song Management, which the board's statement also notes "is majority owned by funds managed and/or advised by Blackstone".
"Hipgnosis Song Management eventually provided an opinion", the board continues, "which was heavily caveated, such that the board has concerns as to the valuation of the company's assets in its interim results. The company expects to publish the interim results by 31 Dec 2023".
The publicly listed Hipgnosis fund has had a shaky few months, of course, with investors becoming increasingly critical of both the HSF board and HSM. The proposed sale of rights to HSC was part of a plan to placate investors by boosting HSF's share price. However, some shareholders were critical of the proposed Hipgnosis to Hipgnosis deal.
That transaction never went ahead after investors overwhelmingly voted against HSF continuing in its current form at a continuation vote in October. A strategic review is now underway to find a way forward that is backed by shareholders.