By Rod James
Country singer Morgan Wallen’s song ’Whiskey Glasses’ is in Raven Music’s portfolio of ‘underappreciated’ tunes. Photo: steve marcus/Reuters
Aquarian Holdings, an investment firm founded by ex-Guggenheim Partners executive Rudy Sahay, has formed a joint venture with asset-based financing specialist Raven Capital to acquire copyrights to less well-known musical works.
Called Raven Music Partners, the venture will initially put up $250 million to acquire the right to reproduce, distribute and perform some 15,000 songs by an array of artists across genres including country, rock, pop and spiritual music, according to Aquarian, which is largely known as a private-credit manager. Aquarian is providing the anchor investment for Raven Music’s purchases.
Working out of offices in New York, Los Angeles and Palm Beach, Fla., Raven Music expects eventually to have at least $1 billion of song copyrights under its ownership, an Aquarian spokeswoman said. The venture is led by Jeremy Tucker, a Raven Capital co-founder and principal.
The move from physical media to digital streaming has increased the value of royalties for the biggest artists, as they can benefit in perpetuity from repeat plays of their work across a broad array of online services such as Spotify. The music-streaming industry is projected to expand at a compound annual rate of over 10% between 2023 and 2030, compared with 7.6% for recorded music more broadly, according to the research arm of investment bank Goldman Sachs. In addition, streaming has grown through new channels, such as videogames and digital fitness apps.
These tailwinds have driven private-equity firms such as KKR & Co. to form multibillion-dollar partnerships with music publishers, banking on their ability to identify artists and songs that will generate long-term revenue.
Michael Jackson, Bruce Springsteen and Bob Dylan are just some of the artists who have sold the rights to all of their work or part of their back catalogs in recent years, with deals valued in the hundreds of millions of dollars.
Singer Meghan Trainor., whose ‘All About That Bass’ is in Raven Music’s portfolio. Photo: Michael Loccisano/Getty Images
Aquarian’s Sahay, whose firm manages nearly $22 billion, said Raven Music is staying clear of highly-priced “trophy assets” and instead looking to create a diversified portfolio of “underappreciated” songs sourced directly from the original rights holder. Among those it is acquiring are “Whiskey Glasses,” by country singer and television talent-show contestant Morgan Wallen; singer-songwriter Meghan Trainor’s 2014 chart topper “All About That Bass,” and “Say You Won’t Let Go” by the English singer James Arthur.
“Strong portfolios combine evergreen catalogs and resilient genres” and can generate predictable royalty streams from the words and melodies of songs as well as recordings of performances, Sahay said. Raven Music’s strategy also tries to factor in expected effects on profitability of intellectual property enforcement and potential changes to technology and the law, he added.
A typical portfolio of music rights generates annual returns on invested capital ranging from 4% or 5% to around 13%, not including any debt that might be added to enhance returns, Sahay said.
Raven Music will partner with Raven Capital portfolio company Endurance Music Group in Nashville, Tenn., to help source new copyright purchases and to manage Raven Music’s catalog. Raven Capital also invests across intellectual property, credit and real-estate assets.
