Can big-spending Merck Mercuriadis build a music company worth more than $1 billion within two years of trading? Don’t bet against it.
This week brought some rosy news for Mercuriadis and Hipgnosis Songs Fund. The acquisitive company – which started trading on the London Stock Exchange (LSE) in July 2018 – is committed to undertaking a semi-annual valuation of its song portfolio, conducted by an independent valuer.
According to that independent valuer, Hipgnosis’ unaudited Operative Net Asset Value (‘Operative NAV’) was 108.46 pence per Ordinary Share on September 30, 2019.
That figure had increased by 5.03% on the 103.27 pence each of these Ordinary Shares were worth six months prior, on March 31.
Handily, figuring out Hipgnosis’s current market cap value doesn’t take us too far away from these numbers.
At 8.45am (GMT) on Monday (November 25), Hipgnosis Songs Fund was trading on the LSE at 180.5 pence per Ordinary Share.
At that time, the firm had 389,356,341 Ordinary Shares in issue, giving its total Ordinary Shares a market cap value of £422.5m (approx $543m.)
However, MBW has confirmed that Hipgnosis also had 231,000,000 C Shares in issue at the same time, which each carried a value of 104.9 pence.
These C Shares therefore carried an overall market cap value of £242.3m (approx $312m, see below).
Added together with the Ordinary Shares, that gave Hipgnosis Songs Fund a total market cap value of £664.8m (approx $855m).
Hipgnosis is expected to announce its interim results for the six months ended September 30, 2019 on December 11.
In its first ever annual results, covering the 12 months to end of March 2019, Hipgnosis revealed that it expected to have spent over $300m on acquisitions by the end of July this year – a period representing just its first 13 months of trading.
Since that point, the company has raised a further $63m, and then another $295m, while acquiring rights and/or revenue streams from the likes of The Chainsmokers, Timbaland and Benny Blanco.
“[This valuation] supports our thesis that songs are a new asset class to be taken as seriously as gold and oil. Our results are not only positive news for Hipgnosis and our shareholders but for all songwriters.”
Merck Mercuriadis, Hipgnosis (pictured with Nile Rodgers)
Merck Mercuriadis, Founder of The Family (Music) Limited and Hipgnosis Songs Fund Limited, said of the firm’s latest independent Operating NAV valuation: “This is an excellent NAV result, and together with the dividends paid reflects a 7.45% Total NAV Return for our shareholders for the first half of the year and a Total NAV Return of 11.96% since Hipgnosis launched 16 months ago.
“This is a testament to the great power of not only our songs but music and proven songs in general, and supports our thesis that songs are a new asset class to be taken as seriously as gold and oil.
“Our results are not only positive news for Hipgnosis and our shareholders but for all songwriters.”Music Business Worldwide
