The never-ending feud between Hipgnosis entities
The ongoing war of words between Hipgnosis Songs Fund and Hipgnosis Song Management continues to escalate, with both parties firing off briefing memos and counter-briefing memos at a frantic pace. The latest update in this saga sees Hipgnosis Songs Fund, also known as SONG, accusing Hipgnosis Song Management of “cherry picking” assets from the SONG catalogue for a proposed sale to another investment fund, Hipgnosis Songs Capital.
The feud between the various Hipgnosis entities is undeniably complex, with multiple companies bearing the Hipgnosis name involved in the battle. At the heart of the conflict are Hipgnosis Songs Fund, a publicly traded investment fund listed on the London Stock Exchange as ‘SONG’, and Hipgnosis Song Management, a firm led by Merck Mercuriadis that serves as the ‘investment adviser’ to SONG. Complicating matters further, Hipgnosis Song Management is majority owned by private equity giant Blackstone, which also runs another private investment fund called Hipgnosis Songs Capital.
The proposed sale of assets, referred to as the ‘First Disposal’, was ultimately rejected by SONG shareholders at a recent AGM, which also marked a turning point in the drama. The AGM saw the replacement of SONG’s board and the launch of a ‘strategic review’ of HSM’s investment adviser role, resulting in the issuance of a bold statement from the new board supported by “independent research reports” from City analysts.
According to these reports, a subset of the catalogues proposed for sale to Hipgnosis Songs Capital were growing at significantly higher rates than the overall portfolio. This led to allegations of “cherry picking” and sparked questions about conflicts of interest between HSM and the various Hipgnosis funds. While some have questioned the validity of these claims, the implication of potential wrongdoing has raised concerns within the investment community.
Despite these allegations, sources familiar with the matter have highlighted the presence of “Chinese walls” – policies and procedures designed to prevent the misuse of inside information – put in place during the First Disposal process. This, along with the involvement of a third-party financial adviser, has raised doubts about the alleged conflict of interest and cherry picking of assets.
Amid the ongoing turmoil, SONG made waves last week by offering a £20 million incentive to potential bidders interested in acquiring some or all of the catalogue of music rights it owns. This move has attracted scrutiny from analysts, with some questioning the timing and necessity of such an announcement.
In any case, the back-and-forth between Hipgnosis entities continues to captivate the investment world, prompting widespread speculation about the motives and actions of those involved. With the feud showing no signs of simmering down, it remains to be seen how the drama will unfold in the coming weeks and months.
In conclusion, the ongoing feud between Hipgnosis Songs Fund and Hipgnosis Song Management has captured the attention of the investment community, raising questions about conflicts of interest and the alleged cherry picking of assets. As the battle rages on, it remains to be seen how the drama will unfold in the coming weeks and months.