LONDON (CelebrityAccess) — Merck Mercuriadis’ music investment vehicle, the Hipgnosis Songs Fund, revealed its year end results for their 2021 fiscal year, reporting that the company’s catalog is now worth $2.7 billion.
Notably, Operative NAV, a formulation that calculates the value of a music catalog, increased by 9.9% percent during 2021, which Hipgnosis claims is the result of the strong performance of its song library.
Gross Revenue increased by 24.7% to $200.4 million for the year, driven partly by catalogue acquisitions during the fiscal year, which ended on March 31st.
EBITDA, or earnings before interest, taxes, depreciation, and amortization, increased by 21.8% to $129.9 million for 2021.
Hipgnosis’ financial filings also revealed some key metrics about the company, whose portfolio now includes 146 Catalogues containing a total of 65,413 songs.
During 2021, Hipgnosis acquired eight different song catalogs, including Red Hot Chili Peppers, Christine McVie of Fleetwood Mac, Ann Wilson of Heart, Rhett Akins, and Stefan and Jordan Johnson – The Monsters & Strangerz which they purchased with the proceeds of a successful stock issuance in July 2021 which raised $215 million.
At the end of their fiscal year, Hipgnosis had outstanding net debt of $569.9 million, representing just over 25% of the value of their catalog holdings, the company said.
Commenting on the results, Merck Mercuriadis said:
“Over the last four years we have acquired an incomparable portfolio of some of the most successful and culturally important Songs of all time, now valued at $2.7 billion. The unique strength of our Catalogue is demonstrated by the 9.9% increase in the Operative NAV to $1.8491 per share, as reported by our Independent Portfolio Valuer, and a Total NAV Return of 14.2%. This is largely driven by our iconic Songs outstripping the general market growth in Streaming, particularly in the second half of 2021, providing validation for our investment strategy.”
“As we look forward, we continue to expect strong global revenue growth driven by the continued adoption of paid-for Streaming. Despite the macro-economic environment, the attractiveness of the music Streaming proposition continues to grow. It is the lowest cost entertainment subscription service and, with its offering of a near complete repertoire of global music, provides the most comprehensive offering of the on-demand, entertainment subscription services. This view is shared by the leading voices in the sector, including Goldman Sachs, who recently upgraded their double digit annual growth forecast through to 2030 in their gold standard Music In The Air: Music still sounds good in a macro downturn; raising global industry forecasts report.”
“With clear evidence of a strong recovery in global Performance income, the recent CRB III determination to increase Streaming royalty rates for songwriters, and potential for further improvements in the upcoming CRB IV determination, all in addition to the extremely strong growth in Streaming, I believe we are looking forward to very attractive market conditions. Given our incomparable collection of iconic Songs, I believe Hipgnosis is perfectly placed and will continue to deliver excellent returns for our Shareholders.”
