Hipgnosis sees value of portfolio cut after new due diligence work
The Hipgnosis Songs Fund has today reported an updated net asset value following the preliminary valuation report prepared by Shot Tower Capital.
The investment trust’s stock price is down over 10 per cent on the news.
Shot Tower was appointed by the company as part of its strategic review of the value of its portfolio of music streaming rights.
The board appointed the third-party advisor following disagreements between the company and its investment advisor Hipgnosis Song Management Limited, over the value of its assets.
Shot Tower has performed a detailed review of the company’s portfolio, using a “variety of factors and assumptions,” about royalty streams, rights and cash revenue generated from the value of assets.
Following the detailed analysis, the advisor has returned a “preliminary valuation report,” which pegged the fair value of the company’s portfolio at between $1.8bn (£1.4bn) and $2.1bn (£1.7bn) and $1.7bn (£1.3bn) and $2bn (£1.6bn) after “deducting contingent catalogue bonuses of $59.9m (£47.3). “
The Shot Tower valuation compared to the 30 September 2023 valuation of $2.6bn (£2.1bn).
Hipgnosis said: “The Shot Tower valuation midpoint of $1.9bn (£1.5bn) therefore reflects a multiple of 15.9x net royalty income prior to deducting contingent catalogue bonuses and a reduction in valuation of 26.3% to the valuation as at 30 September 2023.”
Adjusted solely for the Shot Tower Valuation, the company’s operative net asset value would be approximately $1.17 (92p) per share, compared to the last reported net asset value of $1.7392 (137p) per share at the end of September.
Robert Naylor, Chairman of Hipgnosis Songs Fund, said: “The newly constituted board is making good progress with the due diligence work that will underpin its strategic review. We are disclosing the valuation at this time given its material difference to valuations previously disclosed. The board will provide further detail on this when the due diligence is complete. The board remains focused on identifying all options to deliver shareholder value.”