Hipgnosis Songs Fund (HSF), the UK-listed music rights fund, is set to hold its 2023 ‘continuation vote’ on October 26 during its Annual General Meeting. During this vote, shareholders will decide whether to keep HSF as a publicly-traded bundle of music rights. The frustration among shareholders and management lies in the gap between HSF’s ‘operative Net Asset Value’ and its share price. To potentially address this issue and increase the share price, HSF shareholders are considering a proposal to sell 29 of the company’s catalogs to Blackstone-backed Hipgnosis Songs Capital for $440 million. Meanwhile, the date of the ‘continuation vote’ is linked to the possibility of rival bids being made for the catalogs, which could delay the vote into November.
Today, HSF announced some changes to its board. Andrew Sutch, who has been Chairman since 2018, is stepping down as both Chairman and a director. Additionally, Andrew Wilkinson will retire as a board director, reducing the board to five directors. HSF also disclosed other measures in a circular to shareholders, including the proposal to hold another ‘continuation vote’ in January 2026 if shareholders vote to keep the fund publicly traded in 2023. HSF also made amendments to its Investment Advisory Agreement, including a notice period for the termination of the agreement and the possibility of un-terminating it within the notice period. If the agreement is terminated, HSM, the investment advisor, could potentially acquire HSF’s copyright portfolio with the support of Blackstone.
The date of the ‘continuation vote’ is significant due to a potential $440 million offer from Hipgnosis Songs Capital to acquire the 29 catalogs owned by HSF. While other companies are also invitied to bid for the catalogs, HSM has a ‘matching right’ and any superior offer must exceed the net proceeds from HSC’s offer. If a superior bid is received during the ‘go-shop’ period, the vote may need to be adjourned to November. The HSF board maintains that the company has a unique portfolio of iconic songs and that the investment advisor’s approach to song management should enable the company to outperform the music market. They are committed to delivering value for shareholders through a re-rating of the share price.