HarbourView Equity Partners raises $500 million in debt financing

HarbourView Equity Partners, the Newark, NJ-based investment firm that has acquired music rights from Wiz Khalifa and Fleetwood Mac's Christine McVie, among many others, has raised approximately $500 million through an asset-backed securitization [ABS]the company announced on Wednesday.

Private ABS, backed by royalties generated from its music catalog, is run by global investment firm KKR. Investment accounts advised by Kuvare Asset Management also participated. Guggenheim Securities was the structuring advisor and Guggenheim Securities and Barclays acted as co-placement agents.

“We are grateful to KKR for partnering with us to offer a flexible and innovative financing structure that will support HarbourView in expanding its reach,” HarbourView Founder and CEO Sherrese Clarke Soares he said in a statement. “This capital will allow us to advance our mission to invest in assets and companies driven by leading intellectual property, while striving to ensure that creators are properly valued for their contribution to the world.”

“This transaction is a testament to the scale and flexibility of our high-quality asset-based finance [ABF] strategy, which is a rapidly growing segment of our private credit business,” Avi Korn and Chris Mella, co-head of US ABF at KKR, said in a statement. KKR's ABF division has raised approximately $48 billion in assets under management since 2016. “Music IP is one of many areas where we see opportunities and we are pleased to fund a scalable and high-quality portfolio in this space ».

Founded in 2021, HarbourView started with $1 billion in financial backing from investment giant Apollo Global Management. The company increased its buying power in December by increasing its credit facility by $100 million to $300 million. To date, it has acquired more than 50 catalogs – including Brad Paisley, Jeremih, Nelly, Luis Fonsi and Eslabon Armado – and has $1.6 billion in regulatory assets under management.

ABS will give HarbourView additional ammunition to pursue music rights. When a music company raises money through an ABS, it sells debt that will be repaid by royalties from its music catalog. A large music catalog filled with established songs provides the kind of diversified, predictable income that is attractive to investors. Music companies often prefer an ABS because it tends to have a higher loan-to-value ratio than traditional debt. This means that the music company can raise more financing from a particular portfolio through an ABS than a bank would be willing to lend for the same assets.

A handful of companies have raised huge sums of money through ABS music rights deals in the past two years. In 2021, Lyric and Northleaf issued a $304 million ABS backed by 52,000 assets in Spirit Music Group's portfolio. In 2022, Concord made a $1.8 billion ABS and Chord Music Partners, a venture of KKR and Dundee Music Partners, raised $733 million. Most recently, Kobalt raised $267 million in February through a security backed by publishing rights from a 5,000-song catalog.

The growth of the music streaming market helped create the current climate for music-backed ABS deals — and should lead to more deals in the future. Streaming rights to a large music catalog make music assets “more suitable” for securitization, according to ratings agency S&P Global he wrote in February. “The rise in global music industry revenues in recent years and the desire of market players to diversify funding sources suggest that we may continue to see more of these types of transactions in the coming years.”