Last Wednesday (October 6) two key observations were made on MBW Talking trends podcast on the frantic music catalog acquisitions space:
1) This private equity giant KKR is about to devote more money to music, via a new investment entity;
2) That MBW readers / listeners should “keep an eye” on a large collection of copyright owned by a fund affiliated with Capital of Kobalt, the investment management arm of Kobalt Music Group. We have asserted that this fund’s copyright portfolio may be for sale and will likely earn “as much as $ 1 billion“from a willing buyer.
Days later, those two predictions quickly merge into one of the biggest news of the year in the music business.
A new report from Billboard Rightly suggests that Kobalt is looking to sell its Kobalt Music Royalty Fund II for a price of around $ 1 billion… and that the company is in the final stages of negotiations with an investor group that includes KKR.
Kobalt Capital has managed two funds over the years.
The first and smaller of these two Kobalt funds had a collection of copyrights which were sold to the Hipgnosis Songs Fund for $ 323 million in November of last year.
The second and largest of these funds, Kobalt Music Royalty Fund II, was established in 2017 with $ 600 million to spend, backed by UK pension scheme Railpen, as well as other institutional investors.
The Kobalt Music Royalty Fund II then purchased the SONGS Music Publishing catalog from Matt Pincus for approximately $ 160 million in late 2017.
The acquired SONGS catalog included chart-topping hits from The Weeknd, Lorde and Major Lazer.
Other acquisitions made by Kobalt Music Royalty Fund II include the David Hodges catalog (purchased in 2020), which featured # 1 hit songs written for Evanescence, Kelly Clarkson and Christina Perri.
Billboard reports that Kobalt Music Royalty Fund II also owns recordings and edition catalogs built by the American indie Glassnote. These were sold to the fund as part of a deal that saw Glassnote enter into a global partnership with AWAL, then owned by Kobalt, in late 2018.
Sony Music acquired AWAL alongside Kobalt Neighboring Rights from Kobalt earlier this year in a $ 430 million acquisition. The UK Competition and Markets Authority (CMA) is currently investigating the takeover.
Perhaps the most important news of all of today’s revelations concerns KKR, which appears to be building up a new pot with which to buy its way into the music industry.
KKR already this year announced a completely separate acquisition alliance with BMG, which would have at least $ 1 billion at its disposal to purchase copyright.
Now MBW learns that KKR (and his associates) are looking to woo one of music’s most respected traders to shape and lead their brand new investing game.
Watch this place.
MBW Talking trends podcast will return with a new episode over the coming week.Music trade around the world