UMG will account for its investment in Mavin as a business combination; meaning Mavin’s financials (assets, liabilities, revenues, expenses) will be integrated into UMG’s financial statements.
Universal Music Group has released its annual report for 2023, which contains a trove of information about what the company has been up to. The 355-page document also includes its catalog and frontline roster performances, as well as its financial and operational standing.
One of the parts that would stick out to me is the hint on its investment in Mavin. In February 2024, UMG announced a majority investment in Mavin Global (Mavin). The investment would mark complete exit of TPG, Mavin’s previous investor, while Kupanda Capital remains a minority investor and strategic adviser. Mavin will maintain autonomy over its strategy and future talent development, while Founder/CEO Don Jazzy and COO Tega Oghenejobo will continue leading the company.
In February 2024, UMG announced agreements to invest in Chord Music Partners (“Chord”), NTWRK and Mavin Global (“Mavin”). Total cash consideration for these investments will be approximately €450 million.
Save for Billboard’s reported $150-200 million while the deal was being shopped, there are no confirmed figures of how much the involved parties settled on, following UMG’s majority investment. Moreso, the deal remains subject to regulatory approval and is expected to close by the end of Q3 2024.
Hold the below paragraph, ‘cause you’ll need it further down.👇
In the same February of 2024, UMG also announced a minority investment in the media and entertainment brand, Complex through NTWRK, a Livestream shopping platform. Complex was sold to Buzzfeed for about $294 million in November 2021, and Buzzfeed has now sold Complex to NTWRK for $108.6 million. UMG’s motivation for this investment is to capitalize on the ‘superfan’ culture that will shape the future of commerce, digital media, and music. This entails selling music-associated ‘superfan’ products such as sneakers, streetwear, collectibles, vinyl, and experiences directly to Complex’s culture-savvy audience through NTWRK’s technology. However, there are no clear figures regarding UMG’s actual financial commitment to the deal.
Reading through the later pages of UMG’s annual report, the part that stuck out to me reads:
In February 2024, UMG announced agreements to invest in Chord Music Partners (“Chord”), NTWRK and Mavin Global (“Mavin”). Total cash consideration for these investments will be approximately €450 million.
UMG expects to account for its investments in Chord and NTWRK as associates using the equity method. UMG expects to account for its investment in Mavin as a business combination. The NTWRK and Chord transactions closed in March 2024 while the Mavin transaction remains subject to regulatory approval and is expected to close later in 2024.
Source: Universal Music Group
Said €450 million should be about $480 million when traded
Now, UMG cites three companies it has agreed to invest about $480 million in, viz:
- Chord Music Partners (“Chord”)
- NTWRK (“Complex”)
- Mavin Global (“Mavin”)
UMG x Chord Music Partners (“Chord”)
Also announced in February, the detail of UMG’s minority investment in Chord Music Partners is public knowledge. UMG acquired a 25.8% interest in the company for $240 million in a deal that values Chord at $1.85 billion.
$240 Million Remainder
When you subtract the $240 million Chord investment from UMG’s cumulative $480 million investment, it leaves the investment between Mavin (majority stake) and Complex (minority stake) at about $240 million.
Remember Buzzfeed sold Complex to NTWRK for $108.6 million, which UMG made a minority investment in – definitely less than 50%.
So, you would guess the bulk of this $240 million would go to Mavin, also given Mavin’s weight, track record, and recent success especially with, Rema’s “Calm Down” featuring Selena Gomez being the second-best performing song globally, according to IFPI. The song also rose to #3 on the U.S. Billboard Hot 100 chart and became the first African-led track to reach 1 billion streams on Spotify. Then there’s Ayra Starr’s “Rush” which was the ninth most-streamed song in France in 2023. It was also nominated for the inaugural Best African Music Performance at the GRAMMYs and its music video has become the most viewed music video by a female Nigerian artist on YouTube.
In conclusion, there might be some truth in Billboard’s earlier report in October 2023 that the deal is around $150 million to $200 million.
