Music rights investor Hipgnosis Songs Fund (SONG) has upped its final dividend target to 5.5p per share after deploying £190 million from a fundraise into ‘some of the finest songs of the last 40 years’.
The FTSE 250 trust said it would target the payment of four equal quarterly dividends of 1.3125p per share, starting from the next interim dividend for the period from 1 July to 30 September, expected to be declared in October.
It said, ‘This reflects the board’s, and the investment adviser’s, confidence in the uncorrelated and reliable nature of Songs' income during the global Covid-19 crisis as well as the growth in global recorded music revenues driven by streaming.’
C SHARE CONVERSION
Hipgnosis announced that it has invested around 82%, or £190 million, of the net proceeds from its £236 million C Share fundraising in July, and accordingly plans to convert the C Shares into ordinary shares.
The conversion ratio will be calculated on the close of 30 September and based on the net assets at that time, with the ratio expected to be announced alongside the Hipgnosis’ interim results in December together with an expected date when the conversion will occur.
Hipgnosis said it had invested the proceeds, deployed across seven catalogues, while analysts at broker Liberum said the speed with which the money was invested showed the manager’s ‘ability to swiftly deploy funds post capital raise’ and viewed the purchase of older songs as a positive.
NO MATERIAL IMPACT FROM COVID
Liberum said it doesn’t expect a material impact from the coronavirus pandemic on Hipgnosis’ revenues for its 2021 financial year, given the uncorrelated nature of music royalties.
Overall music publishing revenue is expected to grow 3.5% in 2020, with only live performance revenues suffering a material impact, which as Liberum pointed out accounted for just 3% of Hipgnosis' total income in its 2020 year.
Liberum added, ‘The growth in music streaming continues to be a major tailwind in the sector, with the number of paid music streaming subscribers forecast to increase c.20% in 2020.’
