Back of a man's head listening to music
Hipgnosis shares barely moved after the announcement trading at 66p / Image source: Adobe
  • Sale is at 14% discount to September valuation
  • Interim results out on 19 December
  • Shares down 23% year-to-date

Music royalty firm Hipgnosis Songs Fund (SONG) revealed it had completed the sale of some 20,000 non-core songs for $23.1 million at a 14.2% discount to the valuation as of 30 September.

The shares were barely changed at 66p after the announcement, leaving them down 23% year-to-date.

NOT ENOUGH TO MOVE THE NEEDLE

‘This is a relatively small portfolio disposal, with the discount implying a circa 0.2% reduction in net asset value (NAV), although the discount to the September carrying value of 14% will likely be used as an indication of value by investors. This follows the disposal of Round Hill Music Royalty Fund’s portfolio at a 11.5% discount to valuation,’ said analysts at Numis.

These non-core songs represent approximately 1% of the company’s investment portfolio. Net proceeds of the sale ‘are expected to equal approximately $22.6 million.’

The company also announced it had appointed Shot Tower Capital to conduct due diligence on its assets as part of the ongoing strategic review.

All eyes will now be on the music royalty firm’s financial results for the six months to 30 September which will be announced on 19 December.

Investors will be keen to receive an updated valuation as well as news on the firm's progress in reducing its debt.

Beware of the trusts bearing big discounts

‘In addition, it will be the first report after the appointment as chair of Rob Naylor, the former chair of Round Hill Music Royalty. We expect there may be several moving parts in the interims, given a review of accounting processes, which has already led to the announcement of a reduction in revenue and that there will be no dividends until the next financial year,’ said analysts at Numis.

The music royalty firm owns the song rights for artists including Justin Bieber, Jon Bon Jovi and Neil Young.

It was founded in 2018 by Merck Mercuriadis, the former manager of Elton John, Beyonce, Guns N Roses and Nile Rodgers, the US record producer, guitarist, and co-founder of Chic.

Disclaimer: The author (Sabuhi Gard) owns shares in Hipgnosis Songs Fund.

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Issue Date: 11 Dec 2023