HarbourView Equity Partners, a Newark, NJ-based investment firm specializing in acquiring music rights, has announced a significant financial milestone. The company, known for its acquisitions of music assets from prominent artists like Wiz Khalifa and Christine McVie of Fleetwood Mac, has successfully raised approximately $500 million through an asset-backed securitization (ABS). This strategic financial move, revealed on Wednesday, positions HarbourView for further expansion in the competitive music rights market.
This private ABS was notably led by KKR, a global investment powerhouse, signaling strong institutional confidence in HarbourView’s portfolio and strategy. Investment accounts managed by Kuvare Asset Management also participated in the deal. Guggenheim Securities played a crucial role as the structuring advisor, while Guggenheim Securities and Barclays served as co-placement agents, highlighting the involvement of major financial players in this significant transaction.
HarbourView Equity Partners’ founder and CEO, Sherrese Clarke Soares, expressed gratitude for the partnership with KKR, emphasizing the flexible and innovative financing structure achieved. “We are grateful to KKR for working with us to deliver a flexible and innovative financing structure that will support HarbourView in expanding its reach,” Soares stated. She further articulated the company’s mission, adding, “This capital will allow us to further our mission of investing in assets and companies driven by premier intellectual property while striving to ensure that creators are appropriately valued for their contributions to the world.” This statement underscores HarbourView’s commitment to both growth and ethical valuation within the music industry.
KKR’s co-heads of U.S. ABF, Avi Korn and Chris Mellia, highlighted the transaction as evidence of their High-Grade Asset-Based Finance (ABF) strategy’s effectiveness and versatility. They noted the rapid growth of their private credit business segment, which has amassed approximately $48 billion in assets under management since 2016. “This transaction is a testament to the scale and versatility of our High-Grade Asset-Based Finance [ABF] strategy, which is a fast-growing segment of our private credit business,” Korn and Mellia commented. They also pointed to the attractiveness of music IP as an investment area, stating, “Music IP is one of many areas where we see opportunity and we are pleased to finance a scaled and high-quality portfolio in this space.” This endorsement from KKR further validates the increasing appeal of music assets in the financial market.
Founded in 2021, HarbourView Equity Partners quickly established itself with substantial initial backing of up to $1 billion from Apollo Global Management, another investment giant. The firm further amplified its financial capacity in December by increasing its credit facility by $100 million to $300 million. This aggressive financial strategy has fueled rapid growth, enabling HarbourView to acquire over 50 music catalogs to date. Their impressive portfolio includes rights to music from artists such as Brad Paisley, Jeremih, Nelly, Luis Fonsi, and Eslabon Armado. Currently, HarbourView boasts $1.6 billion in regulatory managed assets, marking it as a significant player in the music rights acquisition landscape.
The newly secured ABS deal provides HarbourView Equity Partners with significant capital to continue its pursuit of music rights acquisitions. Asset-backed securitization is a financial technique where a company raises funds by selling debt that is secured by the future royalties generated from its music catalog. For investors, a diverse and well-established music catalog offers predictable and stable income streams, making it an attractive investment. Music companies often favor ABS deals over traditional debt financing because ABS typically allows for a higher loan-to-value ratio. This means companies like HarbourView can leverage their music assets to raise more capital through ABS compared to conventional bank loans against the same assets.
Over the past couple of years, several companies have successfully utilized music royalties ABS deals to raise substantial capital. In 2021, Lyric and Northleaf pioneered this trend with a $304 million ABS backed by 52,000 assets from Spirit Music Group’s portfolio. Concord followed suit in 2022 with a massive $1.8 billion ABS, and Chord Music Partners, a joint venture between KKR and Dundee Music Partners, raised $733 million. More recently, Kobalt secured $267 million in February through a security backed by publishing royalties from a 5,000-song catalog. These deals highlight the increasing maturity and acceptance of music royalties as a valuable asset class in the financial world.
The growth of the music streaming market is a key driver behind the current boom in music-backed ABS deals, and experts predict this trend will continue. The consistent revenue generated from streaming royalties makes music assets “more suitable” for securitization, according to a report by ratings agency S&P Global in February. Their analysis indicates that “the uptick in global music industry revenue over the last several years, and the desire of market players to diversify funding sources suggests that we may continue to see more of these types of transactions in the coming years.” For HarbourView Equity Partners, this favorable market climate, combined with their new $500 million ABS, positions them strongly for continued growth and influence in the music rights acquisition market.
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