Second music royalties investment trust to IPO

The trust plans to acquire works by artists including The Beatles, The Rolling Stones, Marvin Gaye, Bush, Katy Perry and Bruno Mars.

A new investment trust launched to rival the successful Hipgnosis Songs (LSE:SONG) is preparing to make its stock-market debut. 

The Round Hill Music Royalty (LSE:RHM) fund raised $282 million (£213 million) ahead of its IPO, and will list on the specialist fund segment of the London Stock Exchange main market tomorrow (13 November). The sum raised was less than the $375 million the trust was initially targeting, against a backdrop of a tough environment for fundraising. 

The trust will aim to provide investors with regular and growing income and capital returns by investing in high-quality music intellectual property. Investment manager Round Hill Music will buy songwriters’ copyright interests in songs or musical compositions, as well as the master recording rights. It plans to acquire works by artists including The Beatles, The Rolling Stones, Marvin Gaye, Bush, Katy Perry and Bruno Mars. 

It will target annual returns of 9% to 11%, with a dividend yield of 4.5%.

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The trust will sit in the Association of Investment Companies (AIC) Royalties sector, alongside its only rival, the £882 million Hipgnosis Song fund. It came to market two years ago, raising just over £200 million at IPO. It graduated to the FTSE 250 index this year. Over the last year, it has returned 14.8% in share price total return terms, according to the AIC. With a 4.4% dividend yield, Hipgnosis is currently trading on a 6.6% premium to net asset value. 

Round Hill Music Royalty fund chairman Trevor Bowen pointed to the trust’s portfolio of “some of the world’s best-known artists” and the fact that it will be uncorrelated to movements in the global economy. According to Bowen, investors have shown their strong appetite for the music royalty asset class against a backdrop of global turbulence caused by the pandemic.

“All of us at Round Hill are very pleased with and encouraged by the strong level of support for the IPO of Round Hill Music Royalty Fund Limited,” added company chief executive officer Josh Gruss. “This marks the next stage in Round Hill’s development in London, a market with sophisticated investors that understand music royalties and the potential from this asset class.”