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NOT FOR RELEASE, DISTRIBUTION OR PUBLICATION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, TO ANY US PERSONS OR IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA, SOUTH AFRICA OR JAPAN, OR ANY OTHER JURISDICTION, OR TO ANY PERSON, WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF APPLICABLE LAW.
This announcement is an advertisement and not a prospectus. Investors should not purchase or subscribe for any transferable securities referred to in this announcement except on the basis of information in the prospectus (the "Prospectus") soon to be published by Hipgnosis Songs Fund Limited (the "Company") in connection with the initial public offering and the admission of its ordinary shares (the "Shares") to listing on the Official List of the UK Listing Authority and to trading on the Premium Segment of the Main Market of London Stock Exchange plc (the "London Stock Exchange"). Once published, copies of the Prospectus will be available at the Company's registered office and made available for viewing at the National Storage Mechanism at www.morningstar.co.uk/uk/nsm. This announcement does not constitute or form a part of any offer to sell, or a solicitation of any offer to purchase or otherwise acquire, securities by any US Persons or in the United States or any other jurisdiction. Neither this announcement nor any part of it shall form the basis of or be relied on in connection with or act as an inducement to enter into any contract or commitment whatsoever.
The contents of this announcement, which has been prepared by and is the sole responsibility of the Company, have been approved by Cenkos Securities plc ("Cenkos") solely for the purposes of section 21(2)(b) of the Financial Services and Markets Act 2000 (as amended). Cenkos, which is regulated in the United Kingdom by the Financial Conduct Authority, is advising the Company and no one else in relation to the proposed Issue and Admission (each as defined below), and will not be responsible to anyone other than the Company for providing the protections afforded to the clients of Cenkos or for providing advice in relation to the Issue or Admission or any transaction or arrangement referred to in this announcement.
22 June 2017
HIPGNOSIS SONGS FUND LIMITED
ANNOUNCEMENT OF INTENTION TO FLOAT
Hipgnosis Songs Fund Limited ("Hipgnosis" or the "Company"), the first investment company to be listed on the London Stock Exchange offering pure play exposure to Songs and associated musical intellectual property rights, is pleased to announce its intention to launch an initial public offering of ordinary shares in the capital of the Company ("Ordinary Shares") ("IPO"). The Company aims to provide investors with an attractive and growing level of income and capital growth through acquiring Songs and associated copyrights.
· Hipgnosis will be acquiring a diversified portfolio of Songs1
o The Company has identified a pipeline of Catalogues of Songs which contain proven, evergreen Songs from award winning songwriters
o The Catalogues include hit Songs from over 50 artists
o The Songs include hits from each of the past five decades including more than 10 number 1 hit songs in the UK and US and provide exposure to at least 9 songwriters
o The Board and Hipgnosis Songs Limited, the Investment Adviser, believe suitable opportunities exist which would allow the Net Issue Proceeds to be deployed within 12 months following Admission
· Technology disruption driving royalty income growth
o There is currently a unique market opportunity as technology disruption is changing the way music is consumed
o In 2017, revenues from streaming services are forecast to surpass CD/vinyl sales for the first time as music consumers switch from illegal downloading to convenient and legal streaming, which is resulting in improved monetisation of music
o Global music revenues are also predicted to increase due to penetration of smartphones and a reduction in piracy rates in emerging markets, global synchronisation income being more trackable, and integration of music technology in other products
· Advised by Hipgnosis Songs Limited, a highly influential and award winning team
o The Company will be advised by Hipgnosis Songs Limited which was founded by Merck Mercuriadis, former manager of globally successful recording artists such as Elton John, Guns N' Roses, Morrissey, Iron Maiden and Beyoncé, and hit songwriters such as Diane Warren, Justin Tranter and The-Dream
o The Investment Adviser has assembled an Advisory Board of highly successful music industry experts which include award winning members of the artist, songwriter, publishing, legal, financial, recorded music and music management communities, all with in-depth knowledge of music publishing
o Through its relationship with the Investment Adviser, the Company will have access to an extensive network of contacts and expertise in identifying, acquiring and managing Songs
· Attractive returns and income, with no correlation to capital markets2
o Songs constantly trigger royalty income payments and produce an attractive level of income which can persist for decades and is protected by copyright law
o The Directors believe these returns are driven by consumer spending and listening habits which are uncorrelated to capital markets
o The Company is targeting 10 per cent. per annum total NAV returns over the medium term (net of fees)
o The Company is targeting a 6.5 per cent. annual dividend yield (based on the Issue Price) once fully invested. The Directors expect to pay a first dividend in November 2017
The Company will be making an application for its shares to be admitted to the premium segment of the Official List of the UK Listing Authority and to trading on the London Stock Exchange's Main Market for listed securities ("Admission").
A Prospectus setting out the details of the Placing and Offer for Subscription is expected to be approved by the UK Listing Authority in due course.
Defined terms in this announcement will have the same meaning as defined in the Prospectus.
Cenkos Securities plc has been appointed as Sponsor, financial adviser and Bookrunner to the Company.
For further information, please contact:
Cenkos Securities plc (Sponsor, Financial Adviser and Bookrunner)
Sapna Shah Tel: +44 (0)20 7397 1922
Alex Collins Tel: +44 (0)20 7397 1913
Tom Scrivens Tel: +44 (0)20 7397 1915
Andrew Worne Tel: +44 (0)20 7397 1912
Oliver Packard Tel: +44 (0)20 7397 1918
Alan Ray Tel: +44 (0)20 7397 1916
Will Rogers Tel: +44 (0)20 7397 1920
The Outside Organisation (PR Adviser)
Alan Edwards Tel: +44 (0)20 7436 3633
Nick Caley Tel: +44 (0)7711 081 843
Scott Harris UK Limited (Intermediaries Offer Adviser)
Jeremy Wiseman Tel: +44 (0) 20 7653 0030
Ahmed Jibril Tel: +44 (0) 20 7653 0030
1. Acquisition of these Catalogues is subject to completion of due diligence and Board approvals. There can be no guarantee that the Company will be able to acquire these Catalogues, either on Admission or thereafter.
2. The Company's target dividend yield for the first 12 months following Admission is 3.5 per cent. (based on the Issue Price). The Initial Target Dividend, target dividend and target return are targets only and are not profit forecasts. There can be no assurance that these targets will be met and they should not be taken as an indication of the Company's expected or actual future results. Potential investors should decide for themselves whether or not these targets are reasonable or achievable in deciding whether to invest in the Company.
NOTES TO EDITORS
Hipgnosis Songs Fund Limited is a newly established investment company registered in Guernsey with the Guernsey Financial Services Commission under the Registered Collective Investment Scheme Rules 2015 and the Protection of Investors (Bailiwick of Guernsey) Law, 1987, as amended.
The Company will be the first investment company whose Shares are admitted to the Premium Segment of the Main Market of the London Stock Exchange offering pure-play exposure to Songs and associated musical intellectual property rights. An investment in the Company will enable investors to gain exposure to music royalty and related income from a diverse Portfolio of Songs. The Company aims to provide Shareholders with an attractive and growing level of income and capital growth. The Company has appointed Hipgnosis Songs Limited as its Investment Adviser. The Investment Adviser will be responsible for sourcing Catalogues or individual Songs and making recommendations to the Board on the Company's acquisition of Catalogues. The Company is self-managed, with strategic investment and risk management decisions being taken by its Board.
This announcement is an advertisement and not a prospectus and investors should not subscribe for or purchase any shares referred to in this announcement except on the basis of information in the Prospectus published by the Company in connection with the admission of the Shares to listing on the Official List of the UK Listing Authority and to trading on the Premium Segment of the Main Market of the London Stock Exchange. Once published, copies of the Prospectus will be available from the Company's registered office, and made available for viewing at the National Storage Mechanism at www.morningstar.co.uk/uk/nsm.
The merits or suitability of any securities must be independently determined by each investor on the basis of its own investigation and evaluation of the proposed Company. Any such determination should involve, among other things, an assessment of the legal, tax, accounting, regulatory, financial, credit and other related aspects of the securities.
This announcement may not be used in making any investment decision. This announcement does not contain sufficient information to support an investment decision and investors should ensure that they obtain all available relevant information before making any investment. This announcement does not constitute and may not be construed as an offer to sell, or an invitation to purchase or otherwise acquire, investments of any description, nor as a recommendation regarding the possible offering or the provision of investment advice by any party. No information in this announcement should be construed as providing financial, investment or other professional advice and each prospective investor should consult its own legal, business, tax and other advisers in evaluating the investment opportunity. No reliance may be placed for any purposes whatsoever on this announcement (including, without limitation, any illustrative modelling information contained herein), or its completeness.
Nothing in this announcement constitutes investment advice and any recommendations that may be contained herein have not been based upon a consideration of the investment objectives, financial situation or particular needs of any specific recipient.
The information and opinions contained in this announcement are provided as at the date of this announcement and are subject to change and no representation or warranty, express or implied, is or will be made in relation to the accuracy or completeness of the information contained herein and no responsibility, obligation or liability or duty (whether direct or indirect, in contract, tort or otherwise) is or will be accepted by the Company, Hipgnosis Songs Limited, Cenkos or any of their affiliates or by any of their respective officers, employees or agents in relation to it.
The Company has no investment or trading history. Potential investors should be aware that any investment in the Company is speculative, involves a high degree of risk, and could result in the loss of all or substantially all of their investment. Results can be positively or negatively affected by market conditions beyond the control of the Company or any other person. The returns set out in this announcement are targets only. There is no guarantee that any returns set out in this announcement can be achieved or can be continued if achieved, nor that the Company will make any distributions whatsoever. There may be other additional risks, uncertainties and factors that could cause the returns generated by the Company to be materially lower than the returns set out in this announcement.
The information contained in this announcement is given at the date of its publication (unless otherwise marked). No reliance may be placed for any purpose whatsoever on the information or opinions contained in this announcement or on its completeness, accuracy or fairness. This announcement has not been approved by any competent regulatory or supervisory authority.
The information in this announcement may include forward-looking statements, which are based on the current expectations and projections about future events and in certain cases can be identified by the use of terms such as "may", "will", "should", "expect", "anticipate", "project", "estimate", "intend", "continue", "target", "believe" (or the negatives thereon) or other variations thereon or comparable terminology. These forward-looking statements, as well as those included in any related materials, are subject to risks, uncertainties and assumptions about the Company, including, among other things, the development of its business, trends in its operating industry, and future capital expenditures and acquisitions. In light of these risks, uncertainties and assumptions, the events in the forward-looking statements may not occur. Each of the Company, Hipgnosis Songs Limited, Cenkos and their affiliates and their respective officers, employees and agents expressly disclaim any and all liability which may be based on this announcement and any errors therein or omissions therefrom. No representation or warranty is given to the achievement or reasonableness of future projections, management targets, estimates, prospects or returns, if any. Any views contained herein are based on financial, economic, market and other conditions prevailing as at the date of this announcement. The information contained in this announcement will not be updated. In particular, the target initial dividend yield and target net total return on NAV figures contained in this announcement should not be taken as an indication of the Company's expected future performance or results. These are targets only and there is no guarantee that they can or will be achieved. Accordingly, investors should not place any reliance on such targets.
This announcement does not constitute or form part of, and should not be construed as, any offer or invitation or inducement for sale, transfer or subscription of, or any solicitation of any offer or invitation to buy or subscribe for or to underwrite, any share in the Company or to engage in investment activity (as defined by the Financial Services and Markets Act 2000) in any jurisdiction nor shall it, or any part of it, or the fact of its distribution form the basis of, or be relied on in connection with, any contract or investment decision whatsoever, in any jurisdiction. This announcement does not constitute a recommendation regarding any securities.
Neither this announcement nor any part or copy of it may be taken or transmitted into the United States, Australia, Canada, South Africa or Japan, or distributed directly or indirectly to US Persons (as defined below) or in the United States, Australia, Canada, South Africa or Japan. Any failure to comply with this restriction may constitute a violation of applicable law. This announcement does not constitute an offer of securities to the public in the United States, Australia, Canada, South Africa or Japan or in any other jurisdiction. Persons into whose possession this announcement comes should observe all relevant restrictions.
The Company has not been and will not be registered under the United States Investment Company Act of 1940, as amended (the "Investment Company Act"), and as such investors will not be entitled to the benefits of the Investment Company Act. The Shares have not been and will not be registered under the United States Securities Act of 1933, as amended (the "Securities Act"), or with any securities regulatory authority of any state or other jurisdiction of the United States, and may not be offered, sold, resold, pledged, transferred or delivered, directly or indirectly, into or within the United States or to, or for the account or benefit of, any "U.S. persons" as defined in Regulation S under the Securities Act ("US Persons"), except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and in compliance with any applicable securities laws of any state or other jurisdiction of the United States and in a manner which would not require the Company to register under the Investment Company Act. There will be no public offer of the Shares in the United States.
Neither the United States Securities and Exchange Commission nor any state securities commission has approved or disapproved of the Shares or passed upon or endorsed the merits of the offering of the Shares or the adequacy or accuracy of this announcement.
Prospective investors should take note that any securities may not be acquired by: (i) investors using assets of: (A) an "employee benefit plan" as defined in Section 3(3) of US Employee Retirement Income Security Act of 1974, as amended ("ERISA") that is subject to Title I of ERISA; (B) a "plan" as defined in Section 4975 of the U.S. Tax Code, including an individual retirement account or other arrangement that is subject to Section 4975 of the U.S. Tax Code; or (C) an entity whose underlying assets are considered to include "plan assets" by reason of investment by an "employee benefit plan" or "plan" described in preceding clause (A) or (B) in such entity pursuant to the U.S. Plan Assets Regulations; or (ii) a governmental, church, non-U.S. or other employee benefit plan that is subject to any federal, state, local or non-U.S. law that is substantially similar to the provisions of Title I of ERISA or Section 4975 of the U.S. Tax Code, unless its purchase, holding, and disposition of the Shares will not constitute or result in a non-exempt violation of any such substantially similar law.
Cenkos is authorised and regulated by the Financial Conduct Authority in the United Kingdom. Cenkos is acting for the Company and no one else in connection with the Issue and Admission and will not be responsible to anyone other than the Company for providing the protections afforded to clients of Cenkos or for affording advice in relation to any transaction or arrangement referred to in this announcement. This announcement does not constitute any form of financial opinion or recommendation on the part of Cenkos or any of its respective affiliates and is not intended to be an offer, or the solicitation of any offer, to buy or sell any securities. Cenkos is not responsible for the contents of this announcement or the Prospectus. This does not exclude any responsibilities which Cenkos may have under the Financial Services and Market Act 2000 or the regulatory regime established thereafter.
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