Shop till you drop! Kobalt ready for an acquisition spree after raising $600m

Independent music rights management, publisher and label services firm Kobalt has raised a further US$600 million to acquire and monetize copyrights within its Kobalt Capital division.

Kobalt previously raised $205 million in multiple rounds, with Kobalt Capital raising an additional $350 million in 2011.

“Having crossed six years of activity in the first fund we have made over 100 investments and delivered attractive returns to our investors,” Johan Ahlström, CEO of Kobalt Capital Ltd said in a statement.

The former hedge fund manager added, “With the backing of prominent institutional investors, it validates our strategy and outlook for a robust music industry that is trending upward.”

Kobalt’s most catalogue acquisitions included 170 songs from Steve Winwood from his Traffic and Blind Faith days, The B52s, Fleetwood Mac guitarist Lindsey Buckingham. and US country performer Dierks Bentley.

It also added 18,000 songs owned by Nettwerk including hits by Sinead O’Connor and 10,000 Maniacs.

The latest fundraising, led by RPMI Railpen, a UK workers’ pension fund, alongside other institutional investors, won Kobalt an almost $800 million valuation.

Music catalogues have become in-demand with financial investors as their prices rise sharply and as they provide steady, recurring cash flows.

Kobalt Capital is owned by private and institutional investors and run separately to the core publishing operation which prides itself in allowing its artists to keep their copyrights.

Says Willard Ahdritz, founder & CEO of Kobalt and CIO of Kobalt Capital Ltd, “From day one, Kobalt’s position has been that we don’t own copyright because it creates a conflict of interest with our clients.

“I’m proud to say that we’ve shifted over $3 billion in asset value back to all of our clients on our platform with this no ownership model.

“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 – it’s been a very successful model.”

Ahdritz also predicts that the music industry will grow three times its size, “and that will flow down to 5% growth in publishing.”

Headquartered in London, Kobalt has offices in Sydney, New York, Los Angeles, Nashville, Atlanta, Berlin, Stockholm, Miami and Hong Kong

Its catalogue has 8,000 artists and 600,000 songs.