Hipgnosis Songs Fund Appoints New Auditor

Just one day after announcing a delay in publishing interim financial results for the six months ended Sept. 30, Hipgnosis Songs Fund has announced the appointment of a new auditor.

In a press release on Wednesday (Dec. 20), the Merck Mercuriadis-led company said it had appointed KPMG Channel Islands Limited as its new auditor, “with immediate effect for the financial year ended” Mar. 31, 2024. KPMG succeeds PricewaterhouseCoopers (PwC) in the role.

The release notes that the appointment of KPMG will be subject to approval by the company’s shareholders at a general meeting “to be convened in due course.”

“The previous auditor, PwC CI, has deposited with the Company a statement confirming that there are no matters to be brought to the attention of the Company’s members or creditors,” the release adds.

On Tuesday, Hipgnosis Songs Fund said it would delay publishing its financial results over concerns about its valuation, explaining that the valuation it received from an independent firm was “materially higher than the valuation implied by proposed and recent transactions in the sector.” These transactions include the proposed $417.5 million sale of 29 catalogs to Blackstone-backed Hipgnosis Songs Capital — a price reflecting a 24.3% discount from a valuation dated March 31 — and last week’s sale of 20,000 “non-core songs” to an undisclosed buyer for $23.1 million, which the company said reflects a 14.2% discount on the songs’ valuation as of early fall.

Hipgnosis Songs Fund now expects to announce its financial results on New Year’s Eve, according to the regulatory filing.

Hipgnosis is composed of three companies: Hipgnosis Song Management, Hipgnosis Songs Capital and Hipgnosis Songs Fund, the latter of which has been the subject of controversy for months. On Oct. 16, the London-listed trust revealed that it would not pay its investors a dividend due to new, lower revenue projections. On Oct. 26, more than 80% of the fund’s investors demanded structural changes to the music rights company, voting in favor of the board drawing up “proposals for the reconstruction, reorganization or winding-up of the company to shareholders for their approval within six months.”

Last month, it was also announced that the fund will not declare dividends before the fiscal year, which begins in April, to ensure it has enough on its ledger to pay contractually mandated catalog bonuses.

Hipgnosis Songs Fund owns full or partial rights to the song catalogs of artists including Justin Bieber, Neil Young, Bruno Mars, Jimmy Iovine, 50 Cent, Shakira, Blondie, Justin Timberlake and Lindsey Buckingham.

Hipgnosis Songs Fund ended the day up 1.43% on the London Stock Exchange following the announcement of the new auditor.