Hipgnosis delays financial results amid valuation concerns

Hipgnosis delays financial results amid valuation concerns

The board of Hipgnosis Songs Fund has decided to delay publication of its financial results.

The results for the six months to September 30, 2023, were expected to be published today.

According to a statement, the valuation the company received from its independent valuer is higher than expected in light of recent transactions in the sector. These include the proposed sale of assets to Blackstone-backed Hipgnosis Songs Capital for $417.5 million (a discount of 24.3% to the valuation in March 2023), and the recent sale of non-core assets of $23.1 million (a 14.2% discount).

The $417.5 million deal, involving 29 song catalogues, was called off in October following a shareholder vote against a further five-year mandate for Hipgnosis as an investment trust. The board must put forward a new plan for Hipgnosis shareholders to vote on.

The board sought advice from Hipgnosis Song Management, its investment adviser, which is majority owned by funds managed by Blackstone, on the independent valuer's valuation. 

“Hipgnosis Song Management Limited eventually provided an opinion, which was heavily caveated, such that the board has concerns as to the valuation of the company's assets in its interim results,” said a statement.

Hipgnosis expects to publish the interim results by December 31, 2023.

The company is currently undertaking an audit tender process for March 2024. Former auditor PwC indicated they will not be participating in the tender.

Last month it emerged that Hipgnosis, its founder Merck Mercuriadis and its investment adviser had been served with legal proceedings in the High Court by Hipgnosis Music Limited, a company in liquidation since 2018 and of which Mercuriadis was a director.

Hipgnosis Music Limited alleged a diversion of business opportunity from Hipgnosis Music Limited to Hipgnosis Songs Fund and the investment adviser.

“Mr Mercuriadis, the investment adviser and the company deny such claims and intend to vigorously defend them,” said a statement from Hipgnosis Songs Fund. 

The company is not insured for to the costs of dealing with this claim.


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