Universal Music Group is acquiring a minority stake in Chord, which owns over 60,000 songs from artist catalogs like The Weeknd, John Legend, Lorde and more.
Universal is acquiring a 25.8% stake in the business of Chord for $240 million, joining a consortium of owners. The stake in Chord will provide Universal with the opportunity to invest in artist music catalogs without having to purchase them outright.
Additionally, private equity firm KKR is selling its stake in Chord to Universal and Dundee Partners (another investment firm in the consortium) in a deal that values the entire company at around $1.8 billion including debt, according to Bloomberg.
Universal has long been thinking about how best to approach the industry at a time when the value of music catalogs have soared over the last decade. The company acquired the entire catalog of Bob Dylan in 2020.
While the deals for song rights have slowed as interest rates have risen, valuations for entire catalogs have remained high and investment interest has yet to decline.
In December, The Financial Times reported that rising interest rates rates put a freeze on the outright purchases of music catalogs by private-equity backed businesses.
Wall Street giants KKR, Apollo and Blackstone have pulled back on their promises to fund big catalog buys, still not spending the $3 billion they collectively pledged in October 2021, in large part because the rising rates made it harder to justify loading up the assets with the amount of debt they had planned to use.
