Hipgnosis Songs music catalogue sale comes under scrutiny as continuation vote looms

The response to the proposals from shareholders has so far been lukewarm, with the trust’s share price up less than 0.3%.

In a stock exchange notice on Thursday (14 September), the trust said it had agreed to sell 29 catalogues for $465m to Hipgnosis Songs Capital, the Blackstone-backed private fund managed by SONG investment adviser Hipgnosis Song Management.

Using the proceeds from the catalogue sales, the board also outlined a share buyback programme of up to $180m and the repayment of $250m drawn under the trust's revolving credit facility, as well the introduction of additional, lower investment advisory fee tiers.

Hipgnosis agrees $465m catalogue sale from public trust to private Blackstone vehicle

The move comes more than two months after the board first revealed it had beenconsidering strategic options to re-rate the trust's share price ahead of its five-year continuation vote, which is set to take place over the coming month. 

SONG had been facing additional pressure to deliver a compelling offer to shareholders this week after Round Hill Music Royalty fund (RHM), its closest peer, announced it had agreed to a $468.8m takeover offer by Concord.

The response to the proposals from shareholders has so far been lukewarm, with the trust's share price up less than 0.3%, according to data from Morningstar Direct. SONG's discount has widened to almost 38% after narrowing to a twelve-month low of 36% on Monday (11 September).

Given shareholders and analysts had been calling for Hipgnosis to implement these measures, Matthew Read, senior analyst at QuotedData, toldInvestment Week the details provided are «certainly a positive step».

However, he said it would have been beneficial to shareholders to see a third-party offer