Two quick stories attracted my interest over the last week. The first is from the new music rights fund Hipgnosis. This came to the UK market via a successful IPO a few months ago and to date, we’ve been waiting for more updates on how the portfolio is developing. Last week we heard that the fund has acquired the music catalog of a certain Jason Boyd, a US-based songwriter, and producer better known by his professional name Poo Bear.

According to the fund, “Poo Bear has collaborated, and had Top 10 hits, with some of the biggest artists over the last 20 years, including Usher, David Guetta, DJ Khaled, Chris Brown, Fifth Harmony, Jennifer Lopez and Skrillex, but is best known as one of Justin Bieber’s closest collaborators….Poo Bear co-wrote 9 out of 13 songs on Bieber’s hugely successful album Purpose, which has sold over 14 million copies worldwide and is one of the biggest selling albums in the UK at over 5 times platinum (over 1.5 million copies sold). The catalog includes “What Do You Mean?”, which has sold over 14 million copies worldwide and has been Number 1 in more than 25 countries, “Where Are You Now?”, which has sold over 9 million copies, and most significantly the English language version of Despacito, known as “Despacito (Justin Bieber Remix)” by Luis Fonsi and Daddy Yankee, which was Number 1 in over 50 countries and was the 2018 Grammy Awards Song Of The Year and Record Of The Year as well as the Billboard Music Awards Song Of The Year, and is tied for the longest running Billboard Hot 100 #1 of all time.” My emphasis added.

No price was mentioned for the catalog, but the fund has bought a 100% interest in a total of 214 songs, so I’m guessing the deal value must be north of ten million bucks. What’s interesting here is that the track, Despacito, was Number 1 in more than 50 countries. This means that the fund is clearly going after what could be called ‘investment grade”, prime music assets – stuff which I had assumed was simply too expensive, and largely the preserve of the big music labels.

Clearly Poo Bear aka Jason Boyd is a very happy man, who says this “is something I’ve been working towards for 22 years and I finally feel confident and comfortable that I’m doing this deal with the best company in the business. It’s beyond the money, it’s the assurance that my catalog will be respected and taken to even greater heights of success.” Pity that he won’t be sharing in the success of these tracks as he’s sold out his interest – and must be considering a pleasant retirement lounging on the beach!

Time to think about Malaysia?

I tend to keep a close eye on UK based boutique fund manager Greg Fisher who runs a small firm called Samarang, which in turns manages an excellent fund called the Asian Prosperity fund. Its just announced that it has had one of the worst months in recent memory, buffeted by all manner of negative macro but I still rate Greg highly and watch carefully the assets he buys into – usually relatively good value stuff that has been carefully researched. Anyway, his latest favorite is Malaysia, which he thinks warrants closer attention by Asian investors. The important message here is that China’s competition is beginning to diminish and the rest of Asia is starting to assert itself. This could be a potentially huge story for the next few years or more.

Over to Greg:

“I have just come back from perhaps the most positive set of meetings I have ever had with Malaysian based companies. In the past, I have alluded to the potential benefits accruing from the recent important political changes, and higher oil and gas prices, around which a substantial part of the economy directly or indirectly is linked, as evidenced by the sharp recent improvement in the current account. Given that background, for the last 12 months, I have slowly built up the overall country weighting, adding mainly to existing holdings in industries such as packaging, exporters of household goods, logistics, and a small conglomerate.

Now, something else is changing quite materially to the advantage of many of these businesses. Chinese competition is falling. Partly, it is the result of the new focus in Beijing on environmental issues and practically, the closing down province by province of hundreds of small to medium size factories that could never compete on quality but could undercut on price. But in the end, those same low environmental standards which gave them their low-cost advantage, have killed them off. In addition, the imposition of tariffs by the US on China, with possibly more to come, has created another problem for these Chinese manufacturing exporters.

“The result is that for companies such as Chin Well, a Malaysian exporter of fasteners (nuts and bolts), both present conditions and particularly the outlook for the next few years has dramatically improved. Yet Malaysia remains totally off the radar as regards almost all major global investors, and valuations have compressed down in the last few years. I will be increasing our Malaysian holdings further in the next 12 months and in due course will provide some information about some new investments as well as those you may already be familiar with.My emphasis added.