Skip Header
Important information: The value of investments can go down as well as up so you may get back less than you invest. Investors should note that the views expressed may no longer be current and may have already been acted upon. This is a third-party news feed and may not reflect Fidelity’s views.

Hipgnosis investment manager refuses to drop controversial call option

(Sharecast News) - The investment advisor to Hipgnosis Songs Fund has refused to drop a controversial call option, the troubled music rights owner confirmed on Tuesday. Hipgnosis Songs Management - which is run by HSF founder Merck Mercuriadis and majority owned by private equity firm Blackstone - has the right to purchase HSF's portfolio should its agreement with the fund be terminated.

The board believes the call option is deterring bidders. It therefore wants to amend the articles of the company to enshrine a payment of up to £20m to any prospective bidder, which would act as a form of "cost protection".

It has also called on Hipgnosis Songs Management to unconditionally remove the call option "in the best interests" of all shareholders.

But on Tuesday HSF said the request had been refused. Shareholders will therefore now vote on the proposed £20m payout at an extraordinary general meeting on 7 February.

HSF also confirmed it was launching an investigation into claims that 29 catalogues intended to be sold to Hipgnosis Songs Capital had been "cherry-picked". Hipgnosis Songs Capital is a fund managed by Hipgnosis Songs Management and majority owned by Blackstone.

HSF was thrown into turmoil last autumn when shareholders overwhelmingly rejected the $440m deal. They also voted against the firm continuing as a closed-ended investment company.

Since then, a new board has been incorporated and a strategic review launched.

HSF said on Tuesday: "The newly constituted board notes the statements made by two independent research reports, which asset that the 29 catalogues...were growing at materially higher rates to the overall portfolio and were therefore cherry picked for sale to Hipgnosis Songs Capital.

"The newly constituted board is investigating whether this is the case and if so, whether this was properly and fully disclosed to the previous board...and therefore whether the previous board were provided with the relevant information to enable them to make a decision in the best interests of shareholders."

As at 0930 GMT, shares in HSF were down 1% at 71.48p.

Mercuriadis, a former band manager, founded HSF in 2018.

Share this article

Related Sharecast Articles

Eli Lilly weight-loss drug 'significantly' reduces sleep apnoea
(Sharecast News) - Eli Lily's weight-loss drug tirzepatide has been shown to "significantly" reduce sleep apnoea severity, the US drugs giant said on Wednesday.
Royal Mail-owner rebuffs takeover approach
(Sharecast News) - Shares in International Distribution Services soared on Wednesday, after it emerged that Czech billionaire Daniel Kretinsky had made a takeover approach for the Royal Mail owner.
Just Eat shares drop as Q1 orders disappoint
(Sharecast News) - Shares in Just Eat dropped sharply on Wednesday after the food delivery marketplace delivered underwhelming order numbers for the first quarter, though revenue growth picked up sharply in the UK and Ireland.
Tekcapital's Innovative Eyewear inks deal with US firm
(Sharecast News) - Intellectual property investor Tekcapital announced a fresh development from its portfolio company Innovative Eyewear on Wednesday, as the latter launched a strategic partnership with Windsor Eyes, a prominent eyewear manufacturing and distribution firm.

Important information: This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to one of Fidelity’s advisers or an authorised financial adviser of your choice. When you are thinking about investing in shares, it’s generally a good idea to consider holding them alongside other investments in a diversified portfolio of assets. Past performance is not a reliable indicator of future returns.

Award-winning online share dealing

Search, compare and select from thousands of shares.

Expert insights into investing your money

Our team of experts explore the world of share dealing.