Kobalt's new credit facility, securitization gives it more than $1 billion to trade

Kobalt Music Group, the publishing house of names like Paul McCartney and Karol G, has secured a new $450 million revolving credit facility (RCF), the independent music publisher announced on Tuesday (March 19th).

Combined with the previously announced joint venture with Morgan Stanley and the $266.5 million asset-backed securitization (ABS) transaction, these financial maneuvers provide Kobalt with over $1 billion in funding for acquisitions and investments.

RCF “will fuel our growth initiatives and allow us to further strengthen our position as an industry leader,” Kobalt CFO Catrin Drabble said in a statement. The RCF is led by Truist and refinances existing Kobalt debt. “Together with the Francisco Partners transaction and the Morgan Stanley joint venture, these transactions enable us to continue investing in our business and technology with much greater flexibility, while enhancing the best-in-class service we offer to songwriters and partners us”.

Kobalt, which boasts a catalog of more than 850,000 songs, has had a busy year reworking its balance sheet. In November 2023, Kobalt received a $700 million investment from Morgan Stanley Tactical Value, a part of the investment bank that puts money into alternative assets like music. A year earlier, Francisco Partners acquired a majority stake in Kobalt in a deal that also included investments from Dundee Partners and Matt Pincus' MUSIC.

The company also sold artist development company AWAL to Sony in 2022 for $430 million and sold Kobalt Music Royalty Fund II to Chord Music Partners, a joint venture of KKR and Dundee Partners, in 2021 for $1.1 billion.

The ABS, which Advertising sign due February 21st, features over 5,000 musical works by 66 authors spanning over 50 catalogues. ATLAS SP Partners was the sole structuring agent and joint partner with Truist Securities. Increased investor interest in music as an asset class has led to numerous previous ABS deals, including HarbourView Equity Partners last week and Concord and Chord Music Partners in 2022.