Music royalty fund Hipgnosis delays HY results amid asset valuation doubts

(Reuters) -Music investor Hipgnosis Songs Fund delayed its half-year results on Tuesday, saying the valuation it received from an independent valuer was higher than what was implied by proposed and recent transactions in the sector.

The company said its investment adviser’s opinion on the valuation was “heavily caveated” and the board had concerns on the value of assets in the results for six months to Sept. 30.

The company, which has rights to catalogues of several artists including Shakira, Neil Young and Red Hot Chili Peppers, said it expects to publish the interim results by Dec. 31.

“This is an early blow to the credibility of the new SONG Board, and casts further doubt over the credibility of the independent valuer, Citrin Cooperman,” JP Morgan analysts wrote in a note.

Hipgnosis Songs Fund last month appointed Robert Naylor as its chairman. Naylor, who was previously chair of recently acquired Round Hill Music Royalty Fund, took over the job at a time the British firm is battling to regain shareholder trust.

The music fund is in the middle of a strategic review after shareholders in October voted against its plans to sell a chunk of music catalogues, forcing the board to put forward proposals within six months, with a failure to reach an agreement leading to a potential wind-up.

The London-listed fund’s investment adviser Hipgnosis Song Management said it would work in a “constructive manner” to support the interests of the company and its shareholders.

Both Hipgnosis Songs Fund and HSM were founded in 2017 by music industry veteran Merck Mercuriadis, 60, who has managed the likes of Elton John, Beyonce, Iron Maiden and Guns N’ Roses.

(Reporting by Aby Jose Koilparambil in Bengaluru; Editing by Subhranshu Sahu)