Kobalt Music Group in talks to sell majority stake to Francisco Partners, MBW sources say

Last year was a big year for Kobalt Music Group. The company celebrated its 20th anniversary in 2021 as it sold AWAL to Sony Music – a deal that made it clear for Kobalt to focus on its core music publishing business, plus digital collections company AMRA.

However, 2022 could be an even bigger year in the company’s history.

Senior MBW sources tell us that US-based Francisco Partners is currently in advanced talks to buy a majority stake in Kobalt Music Group, with a deal likely to be signed in the next week or two.

Francisco Partners is no stranger to the music business.

The San Francisco-based technology-focused investment firm acquired a majority stake in music-making platform Native Instruments earlier this year for an undisclosed fee.

With offices in San Francisco, London and New York, Francisco Partners has raised over $24 billion in committed capital since its inception over two decades ago. It has invested in more than 300 technology companies.

Other music-related investments made by Francisco Partners in recent years have included Eventbrite, which secured funding from the investment firm to 225 million dollars in 2020.

MBW sources tell us that, if Francisco Partners’ wholesale purchase of Kobalt Music Group is completed, Willard Ahdritz – founder and CEO of Kobalt – will remain a shareholder in the music company and continue to play a leading role in the future of her. strategy.

“The full list of Kobalt shareholders today is actually quite long and a bit byzantine,” said a source close to the Kobalt business. “A majority purchase by Francisco would bring clarity and stability to Kobalt’s ownership—not to mention growth capital to accelerate AMRA’s expansion globally.”

When contacted for this story by MBW today, a Kobalt spokesperson said the company “does not comment on rumors or speculation.”

According to documents filed at Companies House in the UK, Kobalt Music Group’s total revenue (excluding asset management fees) in FY2021 (the 12 months to the end of June 2021) was 519.4 million dollars.

That was it 11% on a like-for-like basis vs 465.9 million dollars was posted last year.

Kobalt’s publishing division increased its revenue in FY2021 by 9.6% to 478.4 million dollarsup to 436.1 million dollars in the previous year.

AMRA’s annual revenue reached a record high 100 million dollars for the first time in FY2021, hitting 109.8 million dollars. That was it 40.2% compared to last year (78.3 million dollars).

Overall, in terms of gross receipts (including asset management fees), Kobalt says it generated 548 million dollars in FY2021, up 15% VOY.

(Gross collections represent Kobalt’s gross revenue, plus fees he received for his role as advisor/asset manager for music buying funds.)

Since the release of these figures, Kobalt has told MBW that it is now forecasting gross revenue collected company-wide. USD 625 million dollars in it cURRENT financial year (to the end of June 2022).

Kobalt is also anticipating that it will end the current FY with approx 65 million dollars in EBITDA profit.

Last year, Kobalt sold two of its company’s banner areas – AWAL and Kobalt Neighboring Rights (KNR) – to Sony Music in a $430 million deal.

(The above FY2021 figures do not include revenues from AWAL or KNR.)

Meanwhile, Kobalt’s investment management arm, Kobalt Capital, facilitated the sale of two funds that own music in the past two years for a total of 1.4 billion dollars:

According to Bloomberg, in the first quarter of this year, Kobalt Music Group was successfully launched 550 million dollars in debt financing from JPMorgan Chase & Co. and HPS Investment Partners.

Kobalt reportedly intends to use these funds to build its own catalog of music rights through acquisitions.The worldwide music business

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