Kobalt Capital, the investment advisor arm of music services firm Kobalt, has raised $600 million in order to acquire new music copyright catalogs. The funding round was led by U.K. railroad pension fund Railpen, along with other backers, and is broken down as $345 million in equity for investors, with the rest in debt.
The fund is separate to Kobalt’s core music publishing business, which has been careful to not own copyright as to avoid any conflict of interest with clients. Kobalt Capital was created to give copyright users a path to sell their copyright and earn capital. It launched in 2011 and has spent over $350 million on music copyrights to date, including back catalogs for Steve Winwood, Lindsey Buckingham, the B52’s and others.
Kobalt uses its suite of technology and creative services platforms to enhance the value of the catalogs.
Kobalt founder and CEO Willard Ahdritz estimated that the fund has shifted over $3 billion in asset value back to its clients, including those whose copyrights aren’t owned by Kobalt, including Paul McCartney and Maroon 5. “When our clients do want to capitalize on the increased value, which Kobalt has created, this managed fund with institutional investors gives them an option to sell their copyright and still stay with Kobalt.”
According to Johan Ahlström, Kobalt Capital’s CEO, the fund already has over 100 investments and has “delivered attractive returns” to investors. “With the backing of prominent institutional investors, it validates our strategy and outlook for a robust music industry that is trending upward.”
In October, Kobalt announced it had raised an additional $14 million for its Series D round of funding, bringing that total to $89 million raised since May. The added capital has been used to further scale the firm’s creative teams and scale its services to its artists, songwriters, publishers and label clients; invest in R&D for future tech products to support music creators; and to handle the surge in streaming.