Hipgnosis Songs Fund plans flotation to cash in on music royalties
A music royalties fund spearheaded by the former manager of Sir Elton John and Beyonce has laid the groundwork for a £200 million flotation.
Hipgnosis Songs Fund is planning an initial public offering (IPO) in two weeks' time in order to buy up the copyrights to songs and artists so investors can make money from the royalty payments.
Founder Merck Mercuriadis wants to capitalise on the rise of music streaming services following a career managing a raft of superstar performers, from Guns N' Roses and Morrissey to Iron Maiden.
In the prospectus, the firm said: "There is currently a unique market opportunity as technology disruption is changing the way music is consumed.
"The pace at which revenues from music streaming replace and increase those earned from physical and permanent download sales is forecast to grow significantly.
"This is driven in large measures by music consumers switching from illegal downloading to convenient and legal streaming, which is resulting in improved monetisation of music.
"Songs constantly trigger royalty income payments and produce an attractive level of income which can persist for decades and is protected by copyright law."
The fund aims to pay out a 6.5% dividend yield and will float on the London Stock Exchange, with the issuing of 200 million shares at 100p per share.
The advisory board will include singer/songwriter Nile Rodgers from the band Chic, who performed at this year's Glastonbury Festival.