Banking

Hipgnosis Songs fund NAV nudges up 0.7% despite cost of living squeeze

This makes a total NAV return of 60% since the investment company’s launch in July 2018.

Net asset value per share for the six months ended 30 September 2022 was 164.06p, up from 140.79p on 31 March 2022.

The music-based investment trust’s portfolio comprises 146 catalogues, totalling 65,413 songs, with an aggregate fair value of $2.67bn, the company said.

Merck Mercuriadis, CEO and founder of Hipgnosis Song Management and founder of Hipgnosis Songs fund said: “These results demonstrate Hipgnosis’ investment thesis remains robust with continued growth in a challenging environment.”

Shares in the investment trust are trading at 80p, a discount to the operative NAV of over 45%, which implies a discount rate of nearly 12%.

Mercuriadis said this does not reflect “the true value of our iconic songs” and presented “an incredible investment opportunity considering this is a deep discount compared to multiples currently being paid in the market”. 

People continue to listen to and pay for music irrespective of today’s cost of living challenge, he said.

Annual audio streams in the US have already this year passed the one trillion mark for the first time, despite a full month of the year remaining, Mercuriadis added.

Paid for streaming continues to grow, he said, with now more than 523 million premium paid subscribers globally, and Apple Music has moved beyond the 9.99 price point in major markets, while 2022 we saw a full return to live music. 

“These are all exciting indicators for the further growth that we will experience as income flows through the collection process into Hipgnosis,” Mercuriadis said.

Trust chair Andrew Sutch said despite inflationary pressures, interest rate rises and the impact of central banks’ actions to control inflation, “we anticipate continued strong growth in the global music market”.

The trust expects to benefit from increasing revenues from social media, gaming and lifestyle channels. 

Sutch added: “This market growth, coupled with the investment adviser’s song management capabilities and our portfolio of high quality, iconic and culturally important songs gives the board confidence that the company is capable of delivering superior shareholder returns over the medium term.”

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