Hipgnosis announces leadership reshuffle as it gears up for big vote
The board of Hipgnosis Songs Fund has decided to conduct a “strategic review” which will look at different management options as it tries to appease shareholders, who are set to vote on the continuation of the company next week.
Shares in the London-listed company jumped over 2.7 per cent on Thursday morning after it announced it is exploring a management shake-up and potential new strategies following “extensive engagement” with shareholders.
Hipgnosis said today it is looking for a new chair to take over from Andrew Sutch, who was appointed to the role just before the company floated on London’s stock exchange in 2018.
It is also planning for the retirement and replacement of directors who have led the company since IPO.
A change could also threaten to oust founder Merck Mercuriadis, who raised $300m (£248m) to buy catalogues of songs by global artists such as Justin Bieber, Rihanna and Beyonce when he founded the fund in 2018.
If he is ousted, the current management team has a call option to buy back the fund’s portfolio. But the review will consider other options that could keep Mercuriadis involved in management.
A spokesperson for Hipgnosis Songs Management, Merck’s investment advisory firm, commented: “We fully recognise that the Board needs to act as they see fit.
“We continue to believe that HSM is uniquely positioned to deliver value to SONG shareholders as a result of our deep relationship with the songwriters that make up the catalogue and our song management expertise. We intend to continue to demonstrate this through our actions.”
Meetings with shareholders “highlighted a continued belief in the company’s portfolio and growth prospects of the asset class as well as the need for changes by the company in order to deliver value for shareholders,” Hipgnosis said.
On Monday, the music rights company scrapped its dividend payment due to concerns over its compliance with debt covenants, sending shares down 16 per cent.
At its annual general meeting next week shareholders will vote on the Hipgnosis’s continuation and a proposed disposal.
The board recommends they vote in favour of the continuation. While the review “does not envisage” a sale of the entire company, it does not rule it out.
Last month, Hipgnosis said it is selling off 29 of its music catalogues for $440m (£363.6m) to help reduce debt and finance a share buyback programme.
Investors had called on the fund to sell some of its holdings as it grapples with a dwindling share price. Shares are down roughly 14 per cent year-to-date.