Private equity giant Apollo Global Management has led an acquisition of the songbook of Luis Fonsi, the artist behind the smash hit Despacito — Wall Street’s latest pursuit of music copyrights as a machine for steady returns.
Apollo, the $481bn investment group, last year committed $1bn to buying song copyrights through a partnership with HarbourView Equity Partners, an investment group founded by former investment banker Sherrese Clarke Soares.
Financial terms were not disclosed but industry executives estimated that Fonsi’s catalogue could fetch as much as $100m.
Fonsi’s songbook is the first big acquisition by HarbourView as it enters a frenetic market in which Blackstone, KKR, Pimco and other investors are pouring billions into music, viewing music publishing rights as credit-like assets that provide a predictable yield.
From its October launch through to the end of December, HarbourView has struck 24 music deals spanning more than 10,000 songs, a portfolio that Soares estimated would draw $20m to $30m in annual net income from royalties, she told the Financial Times.
Apollo is funnelling cash towards HarbourView through its credit arm, which includes Athene, the retirement annuity group with which it merged last year.
“Importantly, their funds come from credit pools, which means we can give a really good return for that type of risk. It’s safe retirement dollars to really put to work,” said Soares, chief executive of HarbourView, who is directing the allocation of Apollo’s $1bn.
Music copyrights have soared in value as streaming gives old hits a new lease on life. Specialist funds, music labels and private equity groups have been avid buyers.
In the past year, musicians such as Bob Dylan, Stevie Nicks, Neil Young and Paul Simon have sold their songwriting catalogues for nine-figure sums.
Soares, who previously worked at Morgan Stanley, called her business a “fixed-income alternative strategy”.
The daughter of Jamaican immigrants, she believes that her focus on diversity gives her an edge as she competes with other investors for deals. “I want to be the platform that sees the value in all these genres that live outside of legacy rock,” she said, adding: “We are off to the races.”
Fonsi’s catalogue spans more than two decades of work but the Puerto Rican artist is best known for Despacito, which topped the US music charts for 16 consecutive weeks in 2017 — tying Mariah Carey for the record at the time.