Business panel: Music fund a first for former manager of Rocket Man
WHY did Sir Elton John’s former manager just launch a music fund in Guernsey?
Marianna Enevoldsen replies:
A FEW weeks ago, Merck Mercuriadis, the former manager of Sir Elton John, Beyoncé, Guns N’ Roses, Iron Maiden and Morrissey, floated a new music investment fund on the London Stock Exchange. The fund, Hipgnosis Songs Fund, raised just over £200m. to invest in music royalties.
Hipgnosis will acquire catalogues of songs from the past five decades and those songs will then generate royalties for investors every time they are streamed or played on the radio, movies, video games, TV adverts and programmes.
Hipgnosis has already bought its first catalogue of hits from songwriter The-Dream, which includes songs he has written for the likes of Justin Bieber, Rihanna, Mariah Carey and Beyoncé.
Music is an interesting asset to invest in because revenues from music streaming sites like Spotify are growing rapidly and consumers are switching from illegal downloading to legal streaming, which makes it a lot easier for songwriters to maximise royalties.
With the growth of smartphones and the reduction of piracy, the collection of royalties is increasing, particularly in emerging markets.
For investors, investing in music should deliver a regular income and catalogues are also expected to appreciate in value over time.
Music catalogues are also attractive because, unlike most investments, their performance is not tied to bigger global political or economic trends.
Hipgnosis is the first fund of its kind globally and the fact that it is based in Guernsey is the latest sign of the island’s attractiveness for funds looking at investing in new and innovative areas.
One reason funds choose to be based here is the regulatory regime which is smooth and efficient, allowing new funds to be registered in just three days.
The fund administrators, law firms and accountants on the island are also very experienced and have helped numerous innovative investment funds to list on the London Stock Exchange.
Three Guernsey firms have been actively involved in the launch of Hipgnosis, showing how advisers on the island can play a key role in guiding and assisting first-time fund managers with ground-breaking products.
