Hipgnosis Songs considers strategic options ahead of September continuation vote
Hipgnosis Songs fund CEO Merck Mercuriadis said the current share price does not reflect the success of the investment strategy.
The London-listed investment trust, which holds £2.5bn in assets, is currently trading at a 53% discount, according to data from the Association of Investment Companies.
In a stock exchange notice on Thursday (13 July), CEO Merck Mercuriadis said that, following consultation with many of its largest shareholders, the fund has been working with the board on a number of options to enhance shareholder value ahead of its five-year continuation vote in September.
This may include the potential strategic sale of catalogues of songs, the board said. The move follows a report by theFinancial Times published on Wednesday (12 July), which stated that several top investors would like the trust, which is managed by a vehicle owned by Blackstone, to sell off non-core assets to shore up its share price.
Jefferies upgrades £2.5bn Hipgnosis Songs fund to 'Buy'
CCLA, a top ten shareholder with a 4.9% stake, was cited in the article calling for the trust to dispose of less attractive catalogues in the portfolio to return cash to shareholders.
«The big thing to get the share price moving would be to dispose of less attractive catalogues in the portfolio and give a meaningful return to shareholders,» said Solomon Nevins, portfolio manager at CCLA.
Cazenove Capital, another top ten investor with a 6.2% stake, said the sale could compromise the long-term value of the business, while another shareholder toldInvestment Week they did not believe the sale is necessary, but if they are able to sell at carrying value, «then that would be beneficial in proving that valuations are correct».
Rinaldo Beltrame,
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