As expected, global investment firm KKR and Kobalt Capital Limited has announced that KKR, together with its co-investment partner, Dundee Partners, the investment office of the Hendel family, has purchased the KMR Music Royalties II portfolio from KCL for approximately $1.1 billion.
The catalog includes over 62,000 music publishing copyrights, featuring songs by The Weeknd, Lorde and many other artists across multiple genres. According to the announcement, Kobalt Music Publishing – one of the largest publishers in the world – will continue to administer and manage the Fund II works under a multi-year agreement. The company represents over 600 publishers, over 25,000 songwriters and more 700,000 songs and is consistently one of the top three publishing houses by market share. The announcement states that “Kobalt will continue to build on its award-winning music publishing business and global digital collection company, AMRA.” The Kobalt-KKR deal was first announced earlier this month by Billboard.
The transaction was completed by Chord Music Partners, a platform established by KKR with Dundee Partners. KKR will also contribute other music assets purchased over the past year to Chord; according to the announcement, music strategy firm mtheory was instrumental in the development of Chord.
Sources said Kobalt, which sold 33,000 copyrights from a different fund to Hipgnosis Songs for more than $322 million last year, has been lining up a sale for several months or more. The company was founded in 2000 on stated principles of transparency and technology that allowed its artists to see their earnings in relatively real time, a major development in music publishing that challenged the previously opaque royalty practices of industry and attracted major artists like Paul McCartney, Max Martin, Childish Gambino and Dave Grohl of the Foo Fighters; it also acquired the SONGS Publishing catalog in 2017, including the Weeknd and Lorde catalogs, for $150 million. However, industry sources say Variety that he faced challenges as other publishers adopted similar practices and that he was overwhelmed by the infrastructure and larger collection capabilities of the majors in many global territories, although his company AMRA digital collection center is one of the largest in the world.
For its part, KKR, which has invested in the song catalogs of hitmaker Ryan Tedder (Onerepublic, Beyonce, Adele) as well as Gibson guitars, ByteDance (TikTok), Jio Platforms (JioSaavn), Nielsen and Epic Games, adds an asset major to its musical funds.
“We are thrilled to purchase this diverse collection of iconic songs. We look forward to investing in the success of this music and working in collaboration with Kobalt and the artists and songwriters who created it,” said Jenny. Box, Partner at KKR “This transaction positions us at a significant scale, which we will continue to grow by providing flexible and creative capital to music rights holders. Through KKR, we are investing in innovative technology, media and entertainment that connects fans to music in new ways and we’re excited about how this can enhance the value and reach of these songs.
Willard Ahdritz, Chief Investment Officer of Kobalt Capital and Founder and Chairman of Kobalt, said, “When we started Kobalt Capital in 2011, we wanted to work with the music we loved and continue to live for many decades. Our announcement today recognizes this focus, our planned market development and the excellent work we have done at KCL. I’m also proud that creators and rights holders trust us to care for their timeless music and represent it well. We are delighted to welcome KKR and Dundee Partners as clients of Kobalt Music as the new owners of the Fund II works.
Kobalt Capital CEO Johan Ahlström added: “This agreement represents an excellent outcome for our investors and, equally important, the ownership of these copyrights will be transferred seamlessly to new investors who share our commitment to put creators first and be respectful stewards of great music. .”
“Kobalt Music Publishing will continue to act as lead administrator and synchronization licensing partner for the Fund II portfolio,” said Kobalt CEO Laurent Hubert. “We are delighted to be working with KKR, Dundee Partners and the many songwriters we have worked with for years as we continue to provide industry-leading service to all stakeholders to expand the reach of the music we all love. .”
KKR has extensive experience investing in artist-centric businesses, including household names in the music industry such as Gibson Brands and Alpha Theta (fka Pioneer DJ), as well as media and entertainment companies. leading digital content, such as ByteDance (TikTok), Jio Platforms (JioSaavn), Epic Games, OverDrive, RBmedia, ArtList, UFC, Leonine, Next Issue Media and Nielsen.
KKR invests through its Dislocation Opportunities Fund and certain other funds and private credit investment vehicles. KCL was advised by Russell’s. Music strategy firm mtheory advised KKR and Dundee Partners on the transaction. Latham & Watkins LLP and FTI Consulting advised KKR and DLA Piper, Manatt, Phelps & Phillips, LLP, Jefferies LLC and Inkling Capital, LLC advised Dundee Partners.