Kobalt Music Group sold to US private equity firm Francisco Partners
Kobalt Music Group has just become a “unicorn” – but you need to know the recent history of your music industry to understand why.
First, today (September 7), Kobalt confirmed, as MBW predicted last month, that private equity firm Francisco Partners (FP) is acquiring a majority stake in his business.
MBW understands that, if the agreement clarifies regulatory/closing terms, FP’s majority stake in Kobalt will equal approximately 90% of the music company.
At the same time, two other new co-investors will each acquire minority shares in Kobalt at the same time: MUSIC by Matt Pincus, plus Dundee Partners. (Pincus will join Kobalt’s board of directors after the deal closes.)
It is further understood that Kobalt founder Willard Ahdritz will continue to hold a minority stake in the company.
The Kobalt takeover was worth around US$750 million, according to people familiar with the deal speaking to MBW.
But this sale only covers Kobalt as it stands today (Kobalt Music Edition more AMRA).
Step back a little over a year and you’ll recall that Sony Music acquired two businesses from Kobalt Music Group – recorded music platform AWAL, plus Kobalt Neighboring Rights – for a confirmed price of $430 million.
Kobalt Music Group was therefore sold for a total of approximately $1.2 billion ($750 million + $430 million).
Thus, in investor jargon, Kobalt has achieved “unicorn” status, meaning a startup that “releases” for more than $1 billion.
Not that Kobalt’s current management team is “going out.”
Following the agreement with Francisco Partners, Willard Ahdritz will remain Chairman of Kobalt, while the company will continue to be led by Laurent Hubert (CEO), Jeannette Perez (Chairman and COO), Catrin Drabble (CFO) and Nuno Guerreiro (CTO). ).
In a press release, Kobalt said FP’s investment “will support the continuation of AMRA, the enrichment of Kobalt’s technology innovation, and the expansion of Kobalt’s footprint as the premier publisher of independent global music”.
Francisco Partners is a US-based global investment firm with approximately $45 billion in capital raised to date.
Last year, it acquired another well-known music company – music creation platform Native Instruments – for an undisclosed sum.
Discussing the majority sale of his business to FP, Willard Ahdritz, Founder and Chairman of Kobalt, said, “For more than 20 years, Kobalt has been a leader in music with technology at the heart of our focus, and I cannot think of a better investor than Francisco Partners to support our vision and invest deeply in our ambitious technology development and creative services.
“Having known the Francisco Partners team for two years, I am delighted to invite them into the Kobalt family. I look forward to working with them as Chairman of Kobalt. This support is a testament to what we have built at Kobalt , and we will continue to work to improve the industry for our customers.
“I also want to give a special thank you to everyone who has believed in Kobalt from the start: investors, customers and employees, who have all helped build this great company, changing the game for creators.”
Laurent Hubert, CEO of Kobalt, added: “Kobalt has been an agent of change and an innovator for 20 years, and as a result, we have built an extraordinary brand and a creative destination for the best creators in the world.
“We look forward to working with Francisco Partners to embark on the next chapter of Kobalt innovation.
“The combination of FP’s technology expertise and our deep understanding of the music industry will ensure that Kobalt expands its reach and impact as a global music publisher.” Our mission to be a force for positive transformation for the benefit of all creators continues.
Matt Spetzler, Francisco Partners, commented: “Our investment should help bring more resources, experience and alignment to continue to make Kobalt a destination of choice for creators, further develop AMRA as the only global form of digital licensing, and supporting and investing in technology. innovation across the Kobalt ecosystem to meet the needs of creators and publishers. »
And Mario Razzini, Francisco Partners, added, “We believe Kobalt is and should be the premier platform for independent creators, and we look forward to helping them achieve this organically and inorganically.”
(That “inorganically” is relevant: Ahdritz and Hubert de Kobalt tell MBW that with FP’s backing, Kobalt is now officially seeking catalog and business acquisitions to help accelerate its business in the years to come.)
Following the sale of AWAL and Kobalt Neighboring Rights, Kobalt Music Group focused on two key business units: Kobalt Music Publishing and its global digital collection company, AMRA.
Meanwhile, Kobalt’s investment management arm, Kobalt Capital, facilitated the sale of two music property funds over the past two years for a total of $1.4 billion:
According to documents filed at Companies House in the UK, Kobalt Music Group’s total revenue (excluding asset management fees) for the 2021 financial year (the 12 months to the end of June 2021) was $519.4 million.
(This figure does not include revenue from AWAL or Kobalt’s neighboring rights now sold.)
It was up 11% at constant scope compared to the $465.9 million Kobalt displayed the previous year.
Kobalt told MBW that it now expects company-wide gross fundraising revenue of USD $625 million in his running financial year (until the end of June 2022).
Kobalt also expects to end the current fiscal year with approximately $65 million in EBITDA profit.
Goldman Sachs served as financial advisor to Kobalt in the sale of FP, while Raine Group served as financial advisor to Francisco Partners.
Kobalt Music Group features over 700,000 songs, 30,000 songwriters and 500 publishers, including Roddy Ricch, Max Martin, FINNEAS, Karol G, Andrew Watt, Stevie Nicks, Phoebe Bridgers, The Lumineers, Gunna, Justin Quiles, The Foo Fighters and Paul McCartney.The music industry around the world