A KKR-led investment group is about to reach a deal to purchase a catalog of songs from Lorde and The Weeknd for US$1.1 billion, which is the latest sign that the private equity-driven music boom is accelerating.
According to people familiar with the matter, independent music company Kobalt is in in-depth negotiations to sell the catalog to a consortium led by KKR, which will hold a majority stake, and the family office of former Goldman Sachs partner Stephen Handel.
These people familiar with the matter said that progress has been made in the negotiations and an agreement may be announced as soon as this week. The catalog also attracted bids from Apollo-backed consortia and Todd Boehly’s Eldridge Industries.
The deal comes at a time when private equity groups have invested billions of dollars in the music industry as they are looking for a place to allocate funds in an ultra-low interest rate environment.
Years of enthusiasm has only accelerated in recent weeks: Black stone It was revealed on Tuesday that it would support a new $1 billion fund to buy music rights with Hipgnosis, and Apollo announced last week that it will set up a $1 billion fund with former Morgan Stanley banker Cheris Suarez.
Professional buyers such as private equity groups, Hipgnosis, and large record companies are all vying for catalogs of well-known artists whose music has been given a new look due to streaming.Competition has increased valuations, effectively doubling prices in the past ten years, because artists include Bob Dylan And Steve Nix cashed out.
Earlier this year, KKR stated that it would cooperate with BMG, one of the world’s largest music companies, with the goal of acquiring music labels and catalogs. Hartwig MasucciThe CEO of BMG told the Financial Times that KKR will provide BMG with financial firepower to compete for the best assets.
The company also agreed to buy a majority stake in the songwriter Ryan Tide catalog this year.
KKR and Handel declined to comment. Billboard reported last week that KKR may be a buyer of the Kobalt product catalog.