Alternative income fund launched last year by Merck Mercuriadis, Beyonce’s former manager, is looking to place up to £100 million of new shares with investors.
Hipgnosis Songs Fund (SONG), the £214 million alternative income fund launched last year by Merck Mercuriadis, Beyonce’s former manager, is looking to raise £100 million in a share placing.
The Guernsey-based investment company is offering new shares at 102p, a 3.3% premium to the last published net asset value (NAV) per share of 98.74p at 30 September but 3.8% less than yesterday’s closing price of 106p.
By issuing the shares at a premium to their underlying value, the fund avoids diluting the holdings of its existing investors, who include wealth managers and leading multi-asset funds.
Hipgnosis said earlier this month it needed more money to buy further song rights. Since its £200 million flotation last July it has invested or committed £234 million to buy seven catalogues of more than 2,500 songs. These include 214 songs by Jason Boyd, or ‘Poo Bear’, the writer of some of Justin Beiber’s hits.
The new shares will be entitled to the royalty fund’s next quarterly dividend which is expected to be declared this month.
Hipgnosis has so far paid two dividends of 0.5p and is aiming for a total payout of 3.5p in its first year. After that it hopes to raise dividends to 5p a year, offering a 5% yield for its original investors who bought the shares at 100p in last summer’s initial public offer (IPO).
Its long-term target is to generate a total annual investment return, including dividend income, of at least 10%.
At 106p last night the shares stood on premium of 9.6% to Numis Securities’ latest estimate of 96.7p NAV per share. The premium has narrowed this morning after the shares fell towards the placing price, down 3p to 103p.