ANote Music DEAL EXECUTIVE SUMMARY April 2020
003 – IRMA RECORDS Catalogue listed on ANote Music Primary Market
1. OPPORTUNITY Major successes included in the catalogue: - Double Dee Found Love Irma Records (the Transferor) is listing 10% of publishing and - Jestofunk Love in a Black Dimension synchronization royalty streams deriving from its OWN - Montefiori Cocktail publishing catalogue. - Kaleidoscopio Voce Me Apareceu With the inclusion of future tracks in the catalogue, the listing gives - Original soundtrack Sex and the City the right to receive cash flows deriving both from already-produced tracks, as well as from songs that Irma Records publishes throughout 3. TRANSFEROR the deal horizon. The listing has a maturity of 12 years, after which the royalty streams Irma Records is an Italian record label founded in Bologna, Italy, in will return to the transferor. 1989. It releases alternative acoustic lounge and dance music. It currently has offices in both Bologna, Italy and Tokyo, Japan. The catalogue generated royalties averaging €232,213 in the last 5 years (2014-2018). With a deal total valuation of €2,000,000, the By capitalizing on viral dynamics from dealing with popular and listing is set at an entry multiple of 8.58, resulting in an expected profitable songs and catalogues, Irma is expected to significantly yield (IRR, employing constant last 60 months royalties for 12 accelerate its business development and revenue generation, while years) of 5.59%. increasing the value of its own brand and executing an international acquisition and expansion program. First distributions are expected within 3 months from the deal closing date. 4. HIGHLIGHTS
2. CATALOGUE - Medium-sized mature music catalogue with consistent and protected royalty flows.
The catalogue currently includes 10,000+ tracks, diversified by the - Remarkably stable profile of royalty payments, with 5-year genres Dance, Hip Hop, House, Acid Jazz, Lounge, Pop, standard deviation at 3.8%. Electronica, Indie, Bossa, Brazilian. - Diversification by genre, geography and income source. - Inclusion of future tracks provides potential upside. The tracks were published, produced and acquired in over 30 years by - Management by international and experienced leaders in the the iconic record label Irma Records and its associated publishing publishing business. company Music Market SRL, since 1989. - Income predictability expected from stability in music listening habits.
5. FINANCIAL ANALYSIS
SEMI-ANNUAL ROYALTIES (€)
ANote Music S.à r.l. 9 avenue des Hauts-Fourneaux, L-4362 Esch-sur-Alzette, Luxembourg ANote Music R&D is co-financed by: [email protected] ANote Music DEAL EXECUTIVE SUMMARY April 2020
ROYALTIES OVER THE YEARS (€) SEMIANNUAL MEAN DIVERSION (€) ROYALTIES BREAKDOWN BY LOCATION (2018)
300,000 20,000
250,000 15,000 54,285 200,000 65,756 50,798 48,533 73,464 10,000 150,000 5,000 100,000 170,584 188,070 177,235 179,053 143,032 0 50,000 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H 1H -5,000 0 14 14 15 15 16 16 17 17 18 18 19 2014 2015 2016 2017 2018 -10,000 SIAE - ITA SIAE - ABROAD Japan USA France Israel SIAE SUB-PUBLISHERS ABROAD -15,000 Others -20,000
-25,000
CATALOGUE STATISTICS
5-YEAR AVERAGE YEARLY ROYALTIES €232,213 1H2014 - 1H2019
3-YEAR AVERAGE YEARLY ROYALTIES €232,658 1H2016 – 1H2019
LAST-12MONTH ROYALTIES €227,587 2H2018-2H2019
5-YEAR STANDARD DEVIATION €8,772 2014-2018
5-YEAR STANDARD DEVIATION % 3.8% 2014-2018
TOTAL VALUATION €2,000.000 As requested by the transferor
ENTRY MULTIPLE 8.58 Valuation / 5Y royalties
THEORETHICAL IRR 5.59% IRR on entry multiple, based on constant royalties (5Y avg) for 12Y
6. HISTORY AND TRACK RECORD The label began to deal with various musical genres, starting with Acid jazz and Trip Hop, publishing albums by Sarah Jane Morris, Bossa The first years Nostra, Ohm Guru, Gazzara, Black & Brown. Irma's productions started in the late 80’s, with an initial focus on the Starting from 1992, IRMA started a collaboration with the Italian hip House genre. It successfully published international artworks by artists hop artist Frankie hi-nrg mc Fight Da Faida, and his sub-label including Soft House Company, Be Noir, Mozart & Master Freez, Don Mandibola Records (including albums by Colle Der Fomento, Ice One Carlos, as well as the worldwide dance success of Double Dee Found and Alta Tensione). Love, which reached the top of the dance sales charts all over the world. In the mid-90s Irma Records was one of the first labels to release The 90s Lounge / Chillout albums (compilation series: Irma Chill Out Cafè) and the works of the Montefiori Cocktail, which gave birth to a musical In the early 90s, IRMA started productions of Dance House singles, as genre called Cocktail Music. well as albums by artists and groups, among which Jestofunk, which reached top of the international rankings with their first album Love in Thanks to recurrent performances in well-known clubs in Ibiza and to a Black Dimension and singles like Can We Live, Say It Again, I'm Gonna the success of the genre Chill Out, IRMA began some of its most Love You. popular compilation series. Chill Out Cafè, Formentera De Dia and De Noche, made IRMA one of the worldwide reference labels of the genre. The 2000s
ANote Music S.à r.l. 9 avenue des Hauts-Fourneaux, L-4362 Esch-sur-Alzette, Luxembourg ANote Music R&D is co-financed by: [email protected] ANote Music DEAL EXECUTIVE SUMMARY April 2020
In the 2000s the production of Irma Record continued to deal with all Semplice, and Historia de un Amor, which respectively reached first and the most interesting musical genres of the international club scene, third places in the Top 100 iTunes 'Jazz' Songs charts. such as the Drum and Bass, the Breakbeat, the Jazz House and the Nu In recent years, the label started important synchronizations for Jazz. commercials and soundtracks, such as the soundtrack of the popular Great attention was given to Brazilian music, starting with Bossa television series Sex And The City and the series of anime Lupine III. Nostra; the albums of Dom Um Romao, Man Sueto, Banda Favela, Moreover, they executed special marketing operations of major Arcoris, Nu Braz and a series of compilations entitled Sister Bossa were commercial brands including Benetton, Levi’s, MTV and many others. released until 2004, the year of the international affIrmation of the Brazilian group Kaleidoscópio, with the hit Voce me Apareceu. 7. UNDERLYING MUSIC RIGHTS In 2004, the single Happy by the British artist Max Sedgley was released in the UK, becoming a hit in international clubs. Publishing rights In the mid 2000s, besides dealing with genres related to the club music Music publishers earn money through licensing fees and royalties. In arena, Irma began to deal with Italian music, with artists such as Steve terms of song ownership, a publisher usually gets a 50% stake in a Rogers Band, historical group of Vasco Rossi, Maler, songwriter track. launched by Fiorello at Viva Radio 2 and winner of the SIAE Tenco Award, and Agnese Manganaro, singer-songwriter of Lecce, whose There are several types of publishing royalties: mechanical royalties first single is produced by Roberto Vernetti, awarded at the MEI for derive from the sale of recorded music, such as CDs or digital best Italian producer in 2005. downloads. These royalties are paid to publishers by record companies. Performance royalties are collected by performance After 2008, Irma opened up to a more Indie musical taste, ranging from rights organizations such as SESAC, BMI, ASCAP, SIAE, SACEM or Pop to Rock. To date, Irma has released albums by artists such as GEMA and are paid by radio stations, other broadcasters and venues, Silvia's Magic Hands, Jolaurlo, Kalweit and the Spokes, Phinx, Non event organizers for live performances and streaming channels. Giovanni (finalist at the Tenco Award), Joycut, Kaufman, Suz, Skelters, Synchronization royalties are required when a composition is used in Virtual Time, RHumornero, Adam Carpet and many others. a film or television soundtrack. In 2009, IRMA released the first album of the artist jazz nu producer A music publisher is responsible for ensuring the songwriters and Nerio Poggi (Papik, which, with the single Staying for Good entered composers receive payment when their compositions are used the charts of the songs most played by Italian radios - Radio DeeJay, commercially. Through an agreement called a publishing contract, a RMC, Radio 105 and Radio Capital). In the field of Nu Jazz, Irma also songwriter or composer "assigns" the copyright of their composition published Aaron Tesser and the New Jazz Affair, Ely Bruna (solo voice to a publishing company. In return, the company licenses of Papik), Nu Braz and Ida Landsberg, on whose disc several compositions, helps monitor where compositions are used, collects international guests (Frank Gambale, Ferruccio Spinetti, Andy Gravish) royalties and distributes them to the composers. They also secure played. commissions for music and promote existing compositions to In the same year, Irma revitalized the Hip Hop label Mandibola recording artists, film and television. Records, with the publication of the first three albums of the rapper The copyrights owned and administered by publishing companies are Murubutu. The label then published Picciotto, Metal Carter, EasyOne, one of the most important forms of intellectual property in the music Loop Therapy, L'Arcano & Micro B Orchestra, Brain, Denay and Fetz industry. Darko. Sync rights The 2010s Third parties who wish to use a sound recording and composition in In 2011 Irma Records published, among others, I already love you, the an audio-visual setting, such as in a film or on a television show, must second work of the American artist Sara Lov (frontwoman of the negotiate a license fee with the rights holders. This fee are usually paid Devics) and the album by Enrico Brizzi & Yuguerra The Daily Life in in equal parts to the sound recording owner (the master side) and to Italy, where the voice of Enrico Brizzi was combined with the R&R the songwriter and publisher (the publishing side). sounds of the band Yuguerra.
In 2012, the label published the new album Got To Be Real of the Brazilian Jazz singer-songwriter Ithamara Koorax, the second album of 8. MARKET the Roman producer Papik and the first two albums of the swing group Sugarpie And The Candymen. After a “lost decade” (1999-2014), the music industry has been Since 2014, Irma published new albums by Papik and Murubutu, as enjoying a decisive rebound in recent years. Yet there is plenty of room well as the first two singles of the ambitious Marea feat. Mietta: to grow: the streaming component growth outreaches the decline in
ANote Music S.à r.l. 9 avenue des Hauts-Fourneaux, L-4362 Esch-sur-Alzette, Luxembourg ANote Music R&D is co-financed by: [email protected] ANote Music DEAL EXECUTIVE SUMMARY April 2020
digital downloads and physical sales, and the sector is expected to double by 2030 to $131 billion from 2017 levels*. ASSET CLASSES COMPARED* ** Among the reasons behind the expected protracted surge: Millennials and GenZ spending more of their annual budgets on music; a growing penetration of streaming on smartphones, especially in the emerging markets; further upside from positive regulatory changes (e.g. EU Copyright Directive).
*Source: Goldman Sachs Global Investment Research **Asset class performance as proxy: SP500 Index, Eurostoxx50 Index, Barclay Hedge Fund Index, US Real Estate Index, IFPI Global Music Revenues.
9. DEAL DETAILS
TITLE AND DESCRIPTION Publishing catalogue of Irma Records (Music Market SRL)
% OF THE ROYALTY 10% INTEREST LISTED OFFER PRICE €200,000 – 20€ p/share (10,000 shares)
TYPE AND NATURE OF The offered Royalty Interests derive from the exploitation of publishing rights including synch and licensing – ROYALTY INTEREST publishing side. (MUSIC RIGHTS) TRANSFEROR Music Market SRL – IRMA Records’ associated publishing company. Music Market is registered at SIAE with id# 44105 UNDERLYING ROYALTY Publishing Rights are distributed to the Transferor by SIAE and Transferor’s sub-publishers network. Synch and DISTRIBUTOR Licensing Rights – Publishing side, are directly and privately collected by Transferor. DISTRIBUTION Publishing Rights from each distribution source are distributed between once, twice or four times a year; Synch FREQUENCY and Licensing Rights – Publishing side – are distributed from time to time when received. FORESEEN CLOSING DATE Commitment expected as soon as practicable
DEAL TERM (LISTING Maturity Date: 12 years after Closing Date PERIOD) BUY BACK OPTIONALITY --- FUTURE TRACKS The Transferor agrees to include, without any additional financial conditions, in the Catalogue subject of this INCLUDED Listing Order all future acquisitions of new Royalty Interests related to the listed Music Rights on Tracks that Transferor will acquire directly or indirectly for the whole listing period. The inclusion of Royalty Interests on new Tracks will be due and calculated from the moment it is incorporated to the Catalogue until the date of end of the listing period.
10. SPOTIFY PLAYLISTS
A selection of playlists on IRMA Records’ Spotify channel:
ANote Music S.à r.l. 9 avenue des Hauts-Fourneaux, L-4362 Esch-sur-Alzette, Luxembourg ANote Music R&D is co-financed by: [email protected] ANote Music DEAL EXECUTIVE SUMMARY April 2020
ANote Music S.à r.l. 9 avenue des Hauts-Fourneaux, L-4362 Esch-sur-Alzette, Luxembourg ANote Music R&D is co-financed by: [email protected] ANote Music DEAL EXECUTIVE SUMMARY April 2020
11. ANOTE MUSIC 12. ANOTE MUSIC PLATFORM
THE ANOTE MUSIC PLATFORM ANote Music S.à r.l., a Limited Liability Company based in the Grand- Duchy of Luxembourg, is leading the change within the music industry and in the alternative investments arena. ANote Music is a flexible, fast and scalable independent financing platform for the music industry, offering diversification solutions for the financial community.
ANote offers an online web-based proprietary trading platform for transfers and/or trading of Royalty Interests. ANote may offer off-line alternatives for transfers and/or trading of Royalty Interests. Neither the Royalty Interests nor the Platform are regulated under any financial services regulation or by any financial conduct or services regulator. ANote is not a firm regulated by the Luxembourg financial sector regulator (Commission de Surveillance du Secteur Financier - CSSF). The ANote Music Platform is the platform for investing and trading music catalogues and royalty interests.
The Primary Market is where publishers, record labels and any holder
of music rights may sell a percentage of the future royalty generation
of music catalogues that display solid profiles of historical royalty
flows.
The Secondary Market is where investors trade shares of music catalogues. The main tasks of ANote Music include managing the platform, organizing the listings in the Primary Market, receiving royalty payments from distributors and circulating them to investors.
This document has been prepared by ANote Music S.à r.l. (ANote Music). No part of this document may be reproduced, transmitted, stored in a retrieval system or translated in any other language in any form, by any means without the prior written consent of ANote Music. This document is confidential and has been furnished to the intended recipient solely for such recipient’s information and private use and may not be referred to, disclosed, reproduced or redistributed, in whole or in part, to any other person. This document does not constitute a due diligence review and should not be construed as such. No representation or warranty as to this document’s accuracy, completeness or correctness is made and no reliance should be placed on the accuracy, completeness or correctness thereof. The information contained, and any opinions expressed, in this document are subject to change at any time and ANote Music is under no obligation to inform the intended recipient or any other person of any such change. ANote Music accepts no responsibility or liability whatsoever in relation to this document (including for any error contained in this document or in relation to the accuracy, completeness or correctness of this document or in relation to any projections, analyses, assumptions and/or opinions contained herein nor for any loss of profit or damages or any liability to a third party whatsoever arising from the use of this document).
ANote Music S.à r.l. 9 avenue des Hauts-Fourneaux, L-4362 Esch-sur-Alzette, Luxembourg ANote Music R&D is co-financed by: [email protected]