Star quality: Hipgnosis offers investors the chance to make money from the royalties of tracks by famous artists such as Beyonce
The saga continues for Hipgnosis Songs Fund as shareholders voted against continuing the business in its current form, raising serious questions about its future.
At an extraordinary general meeting yesterday, 83.2 per cent of shareholders voted down a five-year mandate to run as an investment trust.
It means Hipgnosis, which offers investors the chance to make money from the royalties of tracks by famous artists such as Beyonce and Neil Young, will now have six months to put forward plans to rebuild the fund.
This could result in winding up the company or liquidating the portfolio.
Hipgnosis, which was set up by Merck Mercuriadis and Chic funk guitarist Nile Rodgers in 2018, confirmed that investors had also snubbed its plans to sell off 29 music catalogues to a Blackstone fund, which Mercuriadis also runs.
Critics had already warned that the £362m deal with Blackstone was too low, providing very little value for shareholders, and flagged up concerns about possible conflicts of interest.
This marks a major blow for Mercuriadis, who had been pushing to sell parts of the fund to boost the beleaguered share price and shrink the company’s debt pile.
Just last week the company said it could not afford to pay a dividend as royalties in the US were due to be less than they anticipated.
This sent the company’s FTSE 250 shares down to an all-time low.
In a statement, Mercuriadis said the shareholder vote ‘marks an opportunity to reset and focus on the future’.
‘Our conversations with shareholders reveal that it is clear that they are asking for change and we respect that feedback,’ he said.
Part of this will mean shaking up the leadership team at the fund, including a new chairman and directors.
Shareholders took the chance to vote against chairman Andrew Sutch, despite the fact he had already announced he would be leaving the business.
Directors Andrew Wilkinson and Paul Burger also resigned late on Wednesday amid shareholder pushback over the past week.
Asset Value Investors, which had been a vocal critic of the fund and owns a 5 per cent stake, said: ‘Shareholders have spoken and sent a clear message that the status quo is unacceptable and that a total reset is required.’
Hipgnosis Songs Fund, which now owns the rights to around 65,000 songs, initially made its name by scooping up the music of some of the world’s best-known performing artists, from the Kaiser Chiefs to Blondie.