Britain’s musical heritage is opening up to investors after a music publisher with 120,000 songs in its catalogue, including hits by The Beatles and The Rolling Stones, revealed plans to raise $375m via a London float.
Round Hill Music Royalty Fund, a US company that has incorporated itself in Guernsey, has opted to list in the UK following the flotation of rival Hipgnosis, an investment fund that buys song rights.
The two companies are among the most active in acquiring catalogues of songs that generate significant income growth in the streaming age. Round Hill’s float will raise funds to buy catalogues of more than 5,000 songs.
The company was founded a decade ago by Josh Gruss, a guitarist in a hard rock band who moved into investment banking and worked for his family’s hedge fund. He started Round Hill with the acquisition of the rights to the Wilson Pickett hit Land of 1,000 Dances and grew the company with regular deals for hits including Total Eclipse of the Heart and When A Man Loves A Woman. It acquired six early songs by The Beatles in 2012 including She Loves You and From Me To You.
Round Hill, like Hipgnosis, specialises in extracting more value from songs that may have been under utilised by previous owners of the rights. This can involve using the songs in advertising or putting them forward for cover versions by new artists to generate more revenue.
The value of those songs has increased as streaming has become mainstream, allowing millions of new fans to discover and play older hits.
Round Hill said it was targeting annual returns of between 9 and 11 per cent and aiming for a dividend yield of 4.5 per cent, in line with its listed rival. It said its three private funds had generated a return of 17 per cent in the past decade and net royalty income of $175m.
“Round Hill as a business has carefully created a catalogue of songs that are timeless and high quality and we look forward to having the opportunity to develop and diversify the business further as a listed entity in London,” said Mr Gruss.
Hipgnosis, run by music industry veteran Merck Mercuriadis, has raised about £1bn since its 2018 float and acquired more than 13,000 songs since including rights owned by The Pretenders and Blondie.
In its investor presentation, Hipgnosis argued the paid-for streaming market has grown from 50m users to 300m in three years and was expected to grow to 1.15bn paying subscribers by 2030.
Letter in response to this article:
Get alerts on IPOs when a new story is published