U.S. asset management firm Pimco has teamed up with BMG to buy a music catalog, the latest major investor in the song rights craze, according to people familiar with the matter.
BMG, one of the world’s largest music companies, last year agreed to a partnership with private equity group KKR for $1 billion to buy music rights. The amount Pimco promised could not be determined, but the fund manager wanted a smaller deal than KKR, a person familiar with the matter said.
The emergence of music streaming on platforms such as Spotify has changed the size of the music business, increasing the appeal of music rights as an investment in an era of ultra-low interest rates.
s arrival pacific investment management corp., which manages $2.2 trillion and is best known for its bond investments, showed an upgrade. Large institutional investors view music rights as bonds that offer predictable returns.
The biggest private equity groups – KKR, Blackstone and Apollo Global Management – are pouring in billions of dollars In the past year, as streaming, which relied on monthly subscription fees, provided a more stable income than sales in the CD era, it went into song rights over the past year.
For private equity groups and credit investors, music rights generate steady cash flow and are relatively uncorrelated to financial markets or the global economy, offering an alternative to corporate bonds.
BMG declined to comment. Pimco also declined to comment.