As expected, Blackstone and Hipgnosis Song Management have launched a $1 billion partnership to invest in songs, recorded music, music IP and royalties, the companies announced Tuesday morning. The news comes amid a flurry of activity by major finance players in the music space, with KKR reportedly in negotiations to buy a $1 billion catalog from Kobalt Capital,  Apollo Global Management is investing up to $1 billion in the new music rights firm HarbourView, following blockbuster deals for the catalogs of Bob Dylan (Universal Music Publishing for nearly $400 million), Neil Young (half of his song catalog to Hipgnosis for $100 million) and Stevie Nicks (her song catalog plus other intellectual property to Primary Wave for $100 million) and others.

The partnership is separate from Hipgnosis Songs, cofounded by Merck Mercuriadis in 2018, which has spent approximately $2.2 billion acquiring catalogs of hitmakers ranging from artists such as Lindsey Buckingham and the Chainsmokers to producer-songwriters like Jeff Bhasker and Eurythmics’ Dave Stewart. However, as part of the partnership, Blackstone will take an ownership stake in HSM and will support the expansion of its infrastructure and business functions, the announcement states, including the development of new song management expertise, data science capabilities and technology solutions. It will have the right to co-invest in future catalog acquisitions alongside the new Blackstone–HSM partnership.

Mercuriadis said: “Hipgnosis Song Management has firmly established songs as an asset class. This new partnership with Blackstone will deliver financial strength to invest in proven songs as well as grow our song management team and bring additional sophistication to HSM, enabling us to create greater value to our stakeholders including our songwriters and shareholders in Song. Given the strength of our pipeline, we see the initial commitment as just the start of a long-term partnership between Blackstone and Hipgnosis that will also include co-investment with Song.”

Qasim Abbas, Senior Managing Director, Blackstone Tactical Opportunities, said: “This partnership underscores the long term, sustainable value we see in creative content across the wider entertainment industry, building on Merck’s vision and dynamism. The music industry has been at the forefront of the fast-growing streaming economy and is unlocking new ways of consuming content. We look forward to working with Merck and his team to continue their exciting journey and safeguard the legacy of the songwriters that entrust us with their content.”

Andrew Sutch, Chairman of Song said: “Our Investment Adviser, Hipgnosis Song Management’s, new partnership with Blackstone highlights how successfully Merck has established songs and music rights as an asset class since founding and listing SONG three years ago. This new partnership will provide new co-investment opportunities for SONG, and we expect that continued investment in Hipgnosis Song Management will enhance returns for our investors.” Blackstone was advised on the transaction by Goldman Sachs, FTI, Kirkland & Ellis and Deloitte. Hipgnosis Song Management was advised by RBC, Capstan Capital Partners and Stephenson