Cutting Edge Group has completed a USD $500 million debt refinancing with a syndicate of four banks led by US-based Fifth Third Bank and Toronto-headquartered private investment firm, Northleaf Capital Partners.
According to the announcement from UK-headquartered Cutting Edge today (April 15), the new funds will be used for a combination of “corporate purposes” and the acquisition of music rights across the film, TV, theatre, gaming, and wellness spaces.
Cutting Edge said it has already identified a “circa USD $1.5 billion pipeline” of potential investments. The Financial Timesreported on Monday morning that those deals “could be further funded by bringing in third-party investors”.
Founded in 2006, London-based Cutting Edge has been a prominent buyer of film and TV music rights over the past few years.
In 2022, it partnered with affiliates of London-based Blantyre Capital in a deal that secured $125 million for acquisitions of music publishing rights from composers who write music for film and TV.
In February last year, Cutting Edge secured another $100 million from banks led by Nashville-based Pinnacle Financial Partners.
We’ve written about Toronto-based Northleaf Capital Partners previously, for example in 2021, when Spirit Music Group owner Lyric Capital Group struck a $500 million strategic alliance with Northleaf.
Since that deal, Northleaf has used Spirit Music Group’s music assets to support the raise of a $303.8 million bond offering.
Also, in February, music financing platform Duetti secured a $75 million credit facility from Northleaf Capital Partners.
In a separate announcement on Monday, Northleaf Capital Partners revealed that it served as the lead arranger of a USD $100 million asset-backed second lien credit facility to Cutting Edge Group. In other words, a $100 million tranche of the total of $500 million secured across the syndicate.
“Northleaf’s investment in Cutting Edge is a great fit for our asset-based specialty finance strategy which seeks to provide our investors with diversified and low correlation exposure,” said David Ross, Managing Director & Head of Private Credit at Northleaf. “This investment represents an attractive addition to our investors’ portfolios.”
CEG’s portfolio includes more than 2,000 titles across soundtrack albums, publishing assets and royalty income streams.
The company’s portfolio comprises music that has featured in film, TV, theatre productions and video games including John Wick, Elf, Star Trek: Discovery, The Jungle Book, The Office, South Park, NCIS: Los Angeles, The Morning Show, Stranger Things, The Crown, Suits, The Walking Dead, Bridgerton, Ted Lasso, Glee, Aquaman, Drive, Matilda: The Musical, Cyberpunk 2077 and Assassin’s Creed Valhalla.
In 2019, CEG expanded into what it called “the rapidly growing category of wellness music”, with a focus on the acquisition of music rights that it said “generate steady, recurring income streams from recordings and compositions used to improve health and wellness outcomes such as sleep, focus, and memory”.
Since then, it says, it has “assembled a significant portfolio featuring over 75 active songwriters and artists generating “several billion streams”, including the award-winning Liquid Mind, 2002, Bernward Koch and Peter Kater”.
CEG noted on Monday that “wellness music is quickly becoming a prominent category on DSPs such as Spotify and Amazon Music“.
The company added that it “has identified a range of off-platform opportunities to actively maximize the potential of its catalog”.
“Through our early conviction in this very specific area of the market, Cutting Edge has become a world leading music partner to the film and tv industries.”
Philip Moross, Cutting Edge Group
Philip Moross, CEO of Cutting Edge Group, said: “Through our early conviction in this very specific area of the market, Cutting Edge has become a world leading music partner to the film and tv industries.
“During that time, the structural trends driving our industries have accelerated exponentially, delivering a proliferation of digital platforms and content, matched by an increase in demand for media music usage.
“Prior to the pandemic, we identified a similar opportunity in the global wellness market, which is now projected to grow at 10% per annum to a US$7 trillion market by 2025. This refinancing will enable us to execute our growth strategy to take full advantage of these trends in our usual disciplined way.”
“Working with our new financial partners, we’re pleased now to be able to move on our identified pipeline, expanding our portfolio and continuing to support this area of the industry.”
Tim Hegarty, Cutting Edge
Tim Hegarty, Cutting Edge Group’s Head of M&A and Corporate Strategy, added: “Working with our new financial partners, we’re pleased now to be able to move on our identified pipeline, expanding our portfolio and continuing to support this area of the industry.”
“Cutting Edge Group has an established track record in royalties and licensing and amassed an attractive portfolio of musical scores and song titles since its inception.”
CJ Wei, Northleaf
CJ Wei, Director, Private Credit at Northleaf, said: “Cutting Edge Group has an established track record in royalties and licensing and amassed an attractive portfolio of musical scores and song titles since its inception.
“We are thrilled to bring our expertise to the table and partner with them to support the company’s strategic growth at a time when there is strong demand worldwide for streamed music content.”
“Fifth Third is honored to have the opportunity to work with Cutting Edge and Philip Moross.”
Jeff Bazoian, Fifth Third
Jeff Bazoian, Head of Media & Entertainment Corporate and Investment Banking at Fifth Third, said: “Fifth Third is honored to have the opportunity to work with Cutting Edge and Philip Moross.
“It is always enjoyable to partner with long-term relationship clients. We are also thankful for our financing partners including Pinnacle, Regions and MUFG. We are looking forward to being a part of the next step in Cutting Edge’s evolution.”
In May 2023, Cutting Edge stepped into the world of pop music, striking a deal with prominent songwriter and producer Jamie Hartman, who’s written or co-written numerous hits for artists such as Lewis Capaldi, Celeste, Calvin Harris, Rag’n’Bone Man and the Backstreet Boys, among many others.
In February, last year, the company announced a new joint venture with Village Roadshow Entertainment Group, parent company of Village Roadshow Pictures and Village Roadshow Television.
The deal covered all of VREG’s past and future music publishing assets, soundtrack album releases and music supervision services, as well as VREG’s music assets for film and scripted and unscripted television.
Among Cutting Edge recent deals is the acquisition of a “major film music catalog” from UK-headquartered First Score Music Ltd., which included full master and publishing rights to more than 75 “premium” film scores. Terms of the deal were undisclosed, but a source told MBW that the deal was worth in the high seven figures.Music Business Worldwide
