Music royalty investor Lyric Capital nabs $800m for sophomore fund

Lyric Capital Group, part of a growing category of investors in music royalties and IP, closed its second offering, sources told Buyouts.

Lyric Capital Royalty Fund II collected $410 million, exceeding its target, sources said. In addition, the New York private equity firm raised senior debt financing, upping the pool’s deployable capital to more than $800 million.

Lyric declined to provide a comment on this story.

The fund closing is the latest sign of the emergence of music royalty investing as an attractive, if still not widely known, niche strategy.

In recent years, a handful of shops, among them HarbourView Equity Partners, backed by Apollo Global Management, have launched to invest in the royalty-generating creative property of artists and songwriters. Established GPs have also pursued deals opportunistically, seen in KKR’s 2021 purchase of Kobalt Capital’s music rights portfolio for $1.1 billion.

The strategy’s appeal owes much to the popularity of online streaming, a relatively new driver of music industry revenue. Economic volatility, spurred by rising interest rates, is perhaps another factor, as music royalties are said to be fairly stable and uncorrelated with other assets.

Lyric is led by Jon Singer and Ross Cameron, both former music executives and investors. The pair founded the firm in 2019 with their management buyout and recap of Spirit Music Group, a music publishing house then owned by Pegasus Capital Advisors.

Spirit, today chaired by Singer, has a catalog of more than 100,000 owned and managed copyrights and master recordings diversified across a range of genres and eras. Its holdings include works recorded by legendary talents like Elvis, Eminem, Whitney Houston, Jay-Z, Chaka Khan, John Legend, Madonna, Frank Sinatra, Taylor Swift and The Who.

With the 2019 Spirit deal, Lyric closed Lyric Capital Royalty Fund I, bringing in $350 million. In the years that followed, fund capital, supplemented by third-party resources, were utilized for further acquisitions of music royalties and IP, using Spirit as the operating platform.

In 2020, for example, Lyric acquired master recordings of country singer and songwriter Tim McGraw. The purchase consisted of the masters of three McGraw albums, featuring hit singles like “Highway Don’t Care” and “Humble & Kind.”

A year later, Lyric acquired a masters, publishing and video portfolio built by an unidentified artist for $130 million. And in 2022, it picked up the lion’s share of the recorded catalog of another country singer and songwriter, Jason Aldean, encompassing nine albums and top singles like “Why.”

Since inception, Lyric has closed on deals worth more than $800 million, sources said. In the process, Spirit has grown from $12 million of net publishers share (net royalties received) to north of $50 million.

In 2021, Lyric secured $500 million from Northleaf Capital Partners and Caisse de dépôt et placement du Québec, giving the investors a stake in certain royalty catalogs and a role in backing future growth. The firm in the same year said it had a $1 billion-plus pipeline of music royalty and IP opportunities.

Founded by Sherrese Clarke Soares, HarbourView is raising an inaugural fund with a $500 million target and a $1 billion hardcap, Buyouts reported.