Hipgnosis Songs Fund Ltd is down 2.0% after delaying its results amid concerns over the valuation of its assets.
The company explained that an independent valuer found its assets to be "materially higher than the valuation implied by proposed and recent transactions in the sector", including recent deals made by the company.
The company said it therefore sought advice from Hipgnosis Song Management Ltd, its investment adviser, on their opinion on the independent valuer's valuation.
"Hipgnosis Song Management Limited eventually provided an opinion, which was heavily caveated, such that the board has concerns as to the valuation of the company's assets in its interim results," the company added.
The troubled music intellectual property investor expects to publish the results before the end of the year.
Steve Clayton at Hargreaves Lansdown noted that Hipgnosis has always been an unusual animal on the stock market.
“They own portfolios of songs, for which they collect the royalties. That idea’s simple enough, but what’s it worth?”, he asked.
Clayton said seasoned market followers will know that the normal sequence of events when a unique business which has assembled a seemingly valuable portfolio of non-traditional assets expresses uncertainty about their value, it is rarely good news.
However, Hipgnosis has reported today that its independent valuer has put a “radically higher valuation” upon their portfolio than even they were expecting.
“Awkwardly, it also suggests that the valuation at which they had sold a portfolio of songs to a related party was well below that true value,” he pointed out.
Despite the high valuation put on the portfolio, the market is treating Hipgnosis with caution this morning," Clayton noted.