A group of KKR-led investors strike a deal to buy a song catalog spanning the hits of Lorde and The Weeknd for $ 1.1 billion, the latest sign that a private capital-fueled land rush for them. musical success is accelerating.
Independent music company Kobalt is in advanced talks to sell the catalog to a consortium led by KKR, which will take a majority stake, and the family office of Stephen Hendel, a former Goldman Sachs partner, according to people familiar with the talks.
Negotiations have been advanced and a deal could be announced as early as this week, the people said. The catalog had also attracted bids from an Apollo-backed consortium and Todd Boehly’s Eldridge Industries.
The deal comes as private equity groups have invested billions in the music industry, as they seek places to allocate capital in an environment of ultra-low interest rates.
The multi-year frenzy has only accelerated in recent weeks: Blackstone revealed on Tuesday it would back a new $ 1 billion fund to buy the music rights with Hipgnosis and Apollo last week announced a $ 1 billion fund dollars with former Morgan Stanley banker Sherrese Soares.
Private equity groups, specialist buyers like Hipgnosis and major music labels have fought for catalogs of established artists, whose music has been given a new lease of life thanks to streaming. Competition has increased valuations, effectively doubling prices over the past decade as artists like Bob Dylan and Stevie Nicks cash in.
KKR announced earlier this year that it will team up with BMG, one of the world’s largest music companies, to target acquisitions of music labels and catalogs. Hartwig Masuch, chief executive of BMG, told the Financial Times that KKR will provide financial firepower to BMG to compete for the best assets.
The company also agreed this year to purchase a controlling stake in the catalog from songwriter Ryan Tedder.
KKR and Hendel declined to comment. Billboard reported last week that KKR was a potential buyer for the Kobalt catalog.