Hipgnosis Founder Merck Mercuriadis to Step Down After Blackstone Deal

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Music entrepreneur Merck Mercuriadis will step down as CEO of Hipgnosis Song Management, the company he founded six years ago to manage music rights.

The company said Tuesday that Mercuriadis will leave after Blackstone completes its $1.6 billion acquisition of Hipgnosis Songs Fund, which is managed by HSM and owns rights to songs by Blondie and the Red Hot Chili Peppers, among others. Blackstone already majority-owned HSM.

Mercuriadis said he plans to “undertake a strategic shift in approach and devote more time to representing the interests of songwriters to ensure they are appropriately compensated for their work.”

His departure marks the end of an era for Hipgnosis and the wider music deal madness it helped spark.

Mercuriadis founded the London-based investment fund in 2018 as a vehicle for buying songs and named it Hipgnosis — after the art group that designed album covers for Pink Floyd and others.

Mercuriadis, obsessed with music and with extensive industry connections, pitched songs to institutional investors as a way to earn reliable, bond-like returns. Mercuriadis’s pitch was compelling: Songs were a better investment than oil or gold, and his connections could help investors take advantage of the burgeoning industry, he said.

The timing was right. Streaming services were driving a resurgence in music revenues, while low interest rates had investors scrambling to find places to invest their money. As a result, an unprecedented amount of Wall Street cash flowed into copyrights—historically a quiet, secretive pocket of the music business.

But Hipgnosis has fallen into disarray over the past few years, with its share price falling far below the valuation Mercuriadis Group had determined it was worth. On September 30 last year, it was worth $2.6 billion. In March this year, it was $1.9 billion, or a net asset value per share of 92 pence. The share price has continued to fall after repeated cuts to the value of its portfolio and questions about its debt levels and governance.

Hipgnosis launched a strategic review last year after losing a shareholder vote that cast doubt on its future as an investment fund. After a protracted bidding war, Blackstone agreed in April to acquire Hipgnosis Songs Fund for nearly $1.6 billion.

Blackstone already has deep ties to Hipgnosis. The private equity group in 2021 bought a majority stake in Mercuriadis’s management arm, HSM, which collects fees for overseeing Hipgnosis’ listed fund. Blackstone also set up a separate $1 billion song acquisition fund, also managed by HSM.

Blackstone Chief Executive Qasim Abbas on Tuesday thanked Mercuriadis for his “support and contribution to HSM.”

“We remain committed to the asset class,” Abbas added. “With a strong senior management team, the company is well-positioned to capitalize on the growing music rights market.”