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Chartered Investment and twelve x twelve turn music rights into tradeable investment products
06. March 2024 | Medienmitteilung

Chartered Investment and twelve x twelve turn music rights into tradeable investment products

Fintech company Chartered Investment and music financing platform twelve x twelve collaborated to jointly launch the first bond that allows for the exploitation of revenue streams generated from GEMA royalties. This innovative financial product offers professional investors the opportunity to diversify their portfolio of alternative assets and provides rights holders with quicker and more efficient means of accessing liquidity.

For the Future of Music 2023-1 Bond Series 1, Chartered Investment securitised revenue streams generated from usage rights to music rights holders’ income via German collecting society and performance rights organisation GEMA (Gesellschaft für musikalische Aufführungs- und mechanische Vervielfältigungsrechte) as a marketable bond. The portfolio comprises some 3,000 musical works from various authors. The bond, targeting professional investors such as funds or family offices, was issued through a private placement in October 2023.

Long-term secure income for investors and artists alike

In recent years, music assets have emerged as a highly attractive investment class, characterised by strong growth that often inversely correlates with economic cycles. Major investors, including Blackstone, have entered this market, recognising its value. However, access to this asset class has been largely limited to investors who have extensive connections within the music industry, leaving much of its potential untapped. Notably, GEMA alone distributes 1 billion euros in royalties annually, highlighting the significant opportunities within this sector.

“Securitising the cash flows from music rights presents a fascinating market”, notes Daniel Maier, General Manager of Chartered Investment Germany GmbH. “It offers promising growth prospects and introduces investors to a relatively untapped asset class within the broader spectrum of alternative investments.”

This model benefits not only investors but also artists. Rights holders often face delays in receiving payments for their works, primarily due to the extended exploitation periods associated with streaming services. Through securitisation, it is possible to accelerate future payments, akin to factoring, enabling rights holders to access liquidity immediately.

“Artists can thus focus more on their creative endeavours without the stress of financial constraints”, explains Jan Denecke, CEO and co-founder of Berlin-based music financing platform twelve x twelve, with which Chartered Investment collaborated to issue the bond.