Universal Music Group raises $ 3.5 billion in funding. Will a spending spree follow?

MBW’s Stats of the Week is a series in which we show why a single data point deserves the attention of the global music industry. Statistics of the week are supported by Group Five Music, a record label, distribution and rights management company focused on technology.

Last month, MBW revealed that Universal music group spent 1.5 billion euros (approximately 1.7 billion dollars) in 2020 on a combination of catalog acquisition and payment of advances to artists.

This expenditure figure was unusually high – more than three times the equivalent number of the previous year. It included nearly $ 400 million spent by UMG for Acquisition of Bob Dylan’s unrivaled song catalog in Q4 2020.

All of this seemed to point to something important: the large “traditional” music companies, like Universal, stubbornly refuse to retreat from a modern music rights acquisition frenzy that has been accelerated by groups like Hipgnosis Songs Fund, Primary wave, KKR and others. (Another example of this trend: Sony Music Editing just spent an unknown – but almost certainly nine-figure – sum on buy Paul Simon’s song catalog.)

The $ 1.7 billion spent by Universal in 2020 suggested that the company was locking in its market power (and refusing to allow it to be clawed back elsewhere) before UMG’s public market debut, which is should arrive in Amsterdam Later this year.

So, has Universal run out of its music acquisition war chest with its gigantic 2020 catalog craziness?

Don’t bet on it.

Universal Music Group confirmed to MBW that it recently reached an agreement with four “top banks” for a new five-year line of financing worth € 3 billion (approximately $ 3.5 billion).

UMG expects the syndication of this financing between a pool of banks to be finalized by the end of April 2021.

One particularly interesting aspect of this increase is that it is being carried out by Universal itself, rather than by its majority parent company, Vivendi.

More precisely, it is the Dutch company of Universal – Universal Music Group BV – which raises the 3.5 billion dollars.

This is not only significant as Universal’s IPO will take place in Amsterdam this year. It’s also important because of UMG’s corporate structure today – one that appears to have been consolidated and cemented in preparation for the company’s IPO.

MBW has obtained the latest official organizational chart from UMG (see below).

It shows Universal Music BV as the parent company of the company’s two global subsidiaries: (i) Universal Music Group Inc (covering the United States); and (ii) Universal International Music BV (covering UMG operations outside the United States in territories such as the United Kingdom, Japan, Germany, China, South Korea, Canada and France ).

Indeed, we have confirmed that the headquarters of Universal Music Group is today officially located in Hilversum, the Netherlands, while its operational headquarters are located in Santa Monica, California, United States.

In other words, Universal Music BV is the name of the largest music rights company in the world. The one currently 80% owned by Vivendi, and 20% by a consortium led by Tencent.

Very soon, therefore, we expect that a part of 60% of Universal Music BV will be sold on the Amsterdam Stock Exchange.

As long as UMG’s new fundraising game is successful, it will go public with $ 3.5 billion in capital in its back pocket.

We anticipate that part of this sum will be used as working capital to enable the newly created company to move.

But it doesn’t take a diviner from the music world to suggest that some of it will eventually end up in the portfolios of iconic songwriters / artists as they sell their life’s work on a sparkling market… at the highest possible price.

Five Music Group’s repertoire has won Grammy Awards, dozens of RIAA Gold and Platinum certifications, and numerous No. 1 positions on a variety of Billboard charts. His repertoire includes heavyweights such as Bad Bunny, Janet Jackson, Daddy Yankee, TI, Sean Kingston, Anuel and hundreds more.Music trade around the world

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