Asset manager Pimco joins song copyright investment frenzy

Jan 14, 2022 | News

The US asset manager Pimco has teamed up with BMG to acquire music catalogues, according to people familiar with the matter, the latest large investor to wade into the frenzy for song copyrights.

BMG, one of the world’s largest music companies, last year agreed a partnership with the private equity group KKR, allocating $1bn to buy music rights. The amount that Pimco has committed could not be determined, but the fund manager is looking to do smaller deals than those of KKR, one person familiar with the situation said.

The advent of music streaming on platforms such as Spotify has transformed the scale of the music business, boosting the appeal of music rights as an investment in an era of ultra-low interest rates.

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The arrival of Pimco, with $2.2tn under management and known for its bond investments, presents an escalation. Large institutional investors are treating music copyrights similarly to bonds that offer a predictable yield.

The largest private equity groups — KKR, Blackstone and Apollo Global Management — have poured billions of dollars into song copyrights in the past year as streaming, which relies on monthly subscription fees, offers steadier revenue than sales in the age of compact discs.

For private equity groups and credit investors, music copyrights generate consistent cash flows and are relatively uncorrelated to financial markets or the global economy, offering an alternative to corporate bonds.

BMG declined to comment. Pimco also declined to comment.

Source: Tech Register

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