Blackstone’s Hipgnosis Acquisition Is Now Backing a $1.5B Securitization

Just three months after Blackstone acquired the music assets of Hipgnosis Songs Fund (HSF) and folded them into Hipgnosis Songs Management (HSM), the hit-filled catalog featuring the Red Hot Chili Peppers, Neil Young, Shakira and many other artists is backing securities that the company hopes will 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 catalog’s music publishing and recorded music rights. The assets in this catalog, acquired by Blackstone from the publicly traded HSF in July for $1.6 billion and folded into HSM, are now valued at $2.36 billion, according to Kroll Bond Ratings Agency’s report. Proceeds from the securitization will be used to repay existing debt, fund the ABS’s reserve account, pay transaction fees and go toward general corporate purposes. 

Acquired after a brief bidding war with Concord, the 45,000-song HSF catalog was built by the trailblazing, London Stock Exchange-listed royalty fund that launched in 2018 and raised about $2.2 billion to acquire music rights by dozens of classic artists and successful producers. In 2023, with HSF’s share price struggling, investors voted for a strategic review that would weigh the options for improving shareholder value. That review painted a damning picture of HSF’s’ operations and resulted in the sale of the fund’s catalog and the resignation of HSM’s chairman, Merck Mercuriadis, in July.  

Through all the drama, Blackstone ended up nabbing a catalog with such premium artists as Rick James, Enrique Iglesias, Steve Winwood and The Pretenders’ Chrissie Hynde, with the tracks having an average age of roughly 19 years. However, there are currently four lawsuits involving assets in the catalog: the ongoing dispute with Barry Manilow regarding earn-out provisions; a copyright infringement claim over Mariah Carey’s “All I Want For Christmas Is You”; a dispute over co-producer royalties from Timbaland recordings; and the so-called “dembow” lawsuit brought by Jamaican duo Steely & Clevie that alleges more than 1,800 reggaetón songs illegally copied the rhythm in the duo’s 1989 track “Fish Market.” 

Lyra Music Assets is the latest in a string of music royalty-based securitizations that allow music companies to utilize their massive catalogs to raise additional capital. As Billboard noted earlier this year, securitizations have increased in popularity as publicly traded royalty funds — 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 by such artists as Justin Timberlake, Nelly Furtado and Leonard Cohen. Concord launched an ABS in October that sought to raise $850 million and also did a $1.65-billion ABS in 2022. Other companies to tap the securitization market include HarbourView Equity Partners, Kobalt anad Chord Music Partners.