Morgan Stanley Taps Kobalt for a $700 Million Investment in Music Copyright

Really interesting times in music, I must say! 🤗

Last week, Kobalt announced a new partnership with investment funds managed by Morgan Stanley Tactical Value. Together, they plan to invest about $700 million in acquiring music copyrights over the next few years.

Kobalt will handle managing creative, synch, licensing, administration, and investment services for these copyrights; while Morgan Stanley Tactical Value, a private equity and credit investment platform within Morgan Stanley Investment Management, brings their expertise and resources to the table.

What Does This Mean? Investing in music is a way for financial institutions to diversify their portfolios and tap into the potential revenue streams offered by the music industry. When big wigs in Finance, like Morgan Stanley, start investing in music copyrights, it means they see the potential for a profitable opportunity in that industry. 

The Morgan Stanley deal marks an interesting return to investment management for Kobalt, as they have quite a track record in this area. Previously, Kobalt's investment management arm, Kobalt Capital, facilitated the sale of two music-owning funds, at a total of $1.4 billion.

The first fund was sold to the Hipgnosis Songs Fund for $323 million in 2020. And a year later, in October 2021, the second fund was snatched up by KKR/the Hendel Family for $1.1 billion.

Since that big sale in October 2021, Kobalt has been using its own money to fuel its merger and acquisition (M&A) activities in the music industry. However, with the arrival of Morgan Stanley's money, Kobalt now has even more capital to work with.

I should add that Kobalt represents an impressive roster of songwriters, with over 700,000 songs in its catalog. From Roddy Ricch to Max Martin, FINNEAS, Karol G, Stevie Nicks, Phoebe Bridgers, Gunna, Paul McCartney etc.

Kobalt Capital operates independently from Kobalt Music Group, which encompasses Kobalt Music Publishing, Kobalt Neighbouring Rights, and AWAL. Within this structure, Kobalt Capital specializes in managing the acquisition of copyrights for various funds, and these funds receive backing from institutional investors.

Wall Street’s interest in the music industry presents interesting opportunities for music publishing and catalog owners.

In 2020, Kobalt signed a publishing agreement with Mr. Eazi’s emPawa Publishing. Kobalt founder, Willard Ahdritz was in town this week for the emPawa music publishing conference that was held in Lagos, Nigeria.