- The Canadian is replaced by head of operations Ben Katovsky
- Mercuriadis will become president of Hipgnosis Songs Management
Moving: Merck Mercuriadis leaves his position as general manager of Hipgnosis Songs Management to become its president
Merck Mercuriadis is stepping down as chief executive of investment adviser Hipgnosis Songs Fund, as the dispute with the trust’s board continues.
The former music executive will become president of Hipgnosis Songs Management, the manager of HSF’s assets, which include the catalogs of some of the world’s greatest musicians.
Mercuriadis will be replaced by operating director Ben Katovsky, who said he hoped to “work constructively” with the music rights fund for the benefit of shareholders.
The fund is currently conducting a strategic review which could lead to its sale, reorganization or even dissolution within six months.
About a fortnight ago, Hipgnosis said it would offer any potential buyer up to £20m as ‘cost protection’ to acquire its entire catalog.
This follows concerns that HSM’s “call option”, which grants it the right to buy the fund’s portfolio of songs, could seriously depress asset values and leave investors bearing significant losses.
Additionally, HSF believes that the call option represents a conflict of interest between its shareholders and the investment advisor.
Katovsky said: “I believe HSM is best positioned to create value for its shareholders, whether they decide the company has a future as a long-term operation or whether they wish to pursue a sale of assets.”
HSM said Katovsky would be in charge of the “executive direction” of the company and the implementation of the company’s growth strategy.
At the same time, Mercuriadis will be responsible for acquisitions, working with songwriters, artists and the music industry and increasing the value of HSM’s client portfolios.
The Canadian founded Hipgnosis Songs Fund with Chic guitarist Nile Rodgers in 2018 after a career managing artists including Sir Elton John, Iron Maiden, Morrissey and Guns ‘N’ Roses.
He said: “Having invested nearly $3 billion on behalf of our clients in songs of extraordinary success, we find ourselves at an important moment in our development where the services we provide to our clients are of a Paramount importance.”
Hipgnosis Songs Fund racked up huge debts buying up the catalogs of dozens of musicians, such as Blondie, Shakira, the Red Hot Chili Peppers, and Christine McVie and Lindsey Buckingham of Fleetwood Mac.
This led to a fall in its value when successive interest rate rises by the Bank of England reduced the attractiveness of music royalties compared to other asset classes, such as bonds.
To try to reduce debts and finance a share buyback, Hipgnosis agreed last year to sell about a fifth of its music portfolio for £372 million to funds advised by Blackstone, the world’s largest asset manager.
But in late October, investors voted against the deal and against continuing the company as an investment company.
Actions of the Hipgnosis Song Fund were down 0.75 percent at 66.5p on Friday afternoon.