Leading shareholders in Hipgnosis Songs Fund (SONG ) have told the Financial Times they will vote against the sale of a fifth of its assets to a Blackstone-backed sister fund at the annual general meeting later this month.

The investment company’s board announced the $440m sale of song rights portfolio last momth to raise cash to reduce the company’s debt and buy back shares to narrow the yawning 50% discount to net asset value.

One top-10 investor told the FT that the price Blackstone offered, which was 17.5% below their March valuation, was too low. ‘It’s all about price - if it was 30% higher then it might make sense. We don’t really want to be parted from the assets.’

They added that shareholders were unhappy about the lack of transparency over the costs of the deal, the tax bill on asset sales and the agreement that accrued income since the start of the year would go to Blackstone as part of the transaction.

Another person familiar with large investors’ voting intentions said there was opposition to the deal as structured, noting they would be ‘stunned if it doesn’t get voted down’, especially since the agreed sale of peer Round Hill Music Royalty (RHM ) was at a much lower discount of 11.5%.

‘On a headline basis it looks like [RHM shareholders] are taking a much smaller haircut than Hipgnosis shareholders,’ they said.

Stifel analyst Sachin Saggar added that shareholders were angry about the process. ‘[It] seems very heavily favoured towards Blackstone,’ he said. ‘People feel a bit insulted about the way it’s been dressed up. Optically, I don’t know what Blackstone was thinking.’

Recently, the board said it would sack fund manager Merck Mercuriadis if the proposal fails to revive the beleaguered share price, while chair Andrew Sutch and another boardmember are stepping down. 

Hipgnosis Songs has separately agreed to sell a portfolio of non-core song rights back to for $25m back to the US business it originally bought them from, Kobalt, according to the FT.

Shareholders emphasised they would vote for continuation at the AGM on 26 October, with one pointing out that a vote against could lead to a fire sale of assets at lower valuations. ‘This is still a fantastic portfolio with strong tailwinds behind it. There is still a long runway for growth.’

Saggar expected most investors to vote in favour of continuation, although Citywire columnist James Carthew wrote today he would vote against the company in both polls.

The continuation vote is scheduled to take place at a general meeting of shareholders half an hour before an extraordinary general meeting in which investors will vote on the transaction.

There is also a provision for other bidders to make a better offer than Blackstone, but analysts and potential buyers believe it is unlikely.

‘There are very specific circumstances with Hipgnosis, and the way potential sales are beig structured makes them unattractive,’ a senior executive at a potential buyer told the FT.

The largest investors include Newton, Investec and Aviva, which own 10%, 9% and 7% of outstanding shares respectively.