Cutting Edge Group secures $500m in new financing

15 April 2024 - Press release

Funding to accelerate acquisition and growth strategy in media music rights niche

 

Cutting Edge Group ("CEG" or the "Group"), the leading investor in and manager of niche media music rights with a portfolio of film, tv and wellness music, has completed a US$500 million debt refinancing with a syndicate of four banks led by Fifth Third Bank ("Fifth Third") and Northleaf Capital Partners ("Northleaf"), a leading global private markets investment firm.  The major new facility will be used for a combination of corporate purposes and the acquisition of music rights from the circa US$1.5 billion pipeline of potential investments already identified by the Group, in alignment with its strategy.

Founded in 2006, CEG is the industry's foremost integrated owner and operator of media music assets. It is backed by its team's deep expertise in this niche segment of the market and close to 20 year track record of success. Its portfolio of more than 2,000 titles across soundtrack albums, publishing assets and royalty income streams, is diversified by composer, production studio, genre and territory, comprising music that has featured in some of the world's most recognised film, tv, theatre productions and video games, including John Wick, Elf, Star Trek: Discovery,  The Jungle Book, The Office, South Park, NCIS: Los Angeles, The Morning Show, Stranger Things, The Crown, Suits, The Walking Dead, Bridgerton, Ted Lasso, Glee, Aquaman, Drive, Matilda: The Musical, Cyberpunk 2077 and Assassin's Creed Valhalla.

In 2019, CEG expanded into the rapidly growing category of wellness music, with a focus on the acquisition of music rights that generate steady, recurring income streams from recordings and compositions used to improve health and wellness outcomes such as sleep, focus, and memory. Since then, it has assembled a significant portfolio featuring over 75 active songwriters and artists generating several billion streams, including the award-winning Liquid Mind, 2002, Bernward Koch and Peter Kater. Wellness music is quickly becoming a prominent category on DSPs such as Spotify and Amazon Music and, in addition to the traditional monetisation channels, CEG has identified a range of off-platform opportunities to actively maximise the potential of its catalogue.

Philip Moross, CEO of Cutting Edge Group, said: "Through our early conviction in this very specific area of the market, Cutting Edge has become a world leading music partner to the film and tv industries. During that time, the structural trends driving our industries have accelerated exponentially, delivering a proliferation of digital platforms and content, matched by an increase in demand for media music usage. Prior to the pandemic, we identified a similar opportunity in the global wellness market, which is now projected to grow at 10% per annum to a US$7 trillion market by 2025. This refinancing will enable us to execute our growth strategy to take full advantage of these trends in our usual disciplined way."

Tim Hegarty, Cutting Edge Group's Head of M&A and Corporate Strategy, added: "Working with our new financial partners, we're pleased now to be able to move on our identified pipeline, expanding our portfolio and continuing to support this area of the industry."

CJ Wei, Director, Private Credit at Northleaf, said: "Cutting Edge Group has an established track record in royalties and licensing and amassed an attractive portfolio of musical scores and song titles since its inception. We are thrilled to bring our expertise to the table and partner with them to support the company's strategic growth at a time when there is strong demand worldwide for streamed music content."

Jeff Bazoian, Head of Media & Entertainment Corporate and Investment Banking at Fifth Third, commented: "Fifth Third is honored to have the opportunity to work with Cutting Edge and Philip Moross.  It is always enjoyable to partner with long term relationship clients.  We are also thankful for our financing partners including Pinnacle, Regions and MUFG.  We are looking forward to being a part of the next step in Cutting Edge's evolution."