Private equity investor Howard Lipson and music entrepreneur James Diener have formed Alignment Artist Capital to offer well-known acts a new financing option, which they say will ‘allow acts to expand their brands and careers, fuel growth and fund innovative, creative projects’.

The money is offered for artists willing to accept business objectives, via structured investments with a 4-5 year horizon. With equity funding from BlackRock Alternative Investors (BAI) accounts, Alignment says it will work with artists who have already built a foundation of creative and business initiatives such as recorded music, songwriting, producing, touring, TV and film, merchandising and licensing, social media and more.

Its initial investments will range from $5 million to $20 million per transaction, but this could rise in future. Alignment says it is paving the way for a “new model that co-exists with the industry’s existing recording, publishing and touring agreements”.

The founding of Alignment reunites Diener, former CEO/President of independent label Octone Records with Lipson, who was a financial backers of Octone.

Octone discovered and developed Maroon 5, as well as platinum acts such as Hollywood Undead, Flyleaf and K’naan, among others. It partnered with Clive Davis’ RCA Music Records Group/Sony Music Entertainment and later entered into a joint venture to create A&M/Octone with Universal Music Group in a deal led by Jimmy Iovine, then Interscope Records Chairman. In 2013, Octone sold its 50% share of A&M/Octone to UMG.

“Being part of Octone for the past decade gave me a front row seat to observe the massive changes in how fans enjoy music and the pressures that artists have in creating music within conventional industry structures,” said Lipson.

“I saw artists getting pulled into different, often conflicting directions. While there have been attempts to structure more comprehensive deals with artists, a lot of dissonance remains. With Alignment, we wanted to reduce the friction in the process and provide financing that takes a holistic view of an artist’s career and the overall music business. We’ll be investing in artists we believe in within a time horizon that provides a good runway for the creative process and a philosophy that will reap solid returns.”

“The way recording artists create and realize their ambitions is unique; it doesn’t always fit the conventional structure or traditional model,” said Diener.

“We now provide an innovative financial product backed by BlackRock, the world’s most successful asset manager, for artists with an existing foundation of work. We aim to provide them with a new financing source to pursue a range of creative objectives, over and above their current industry relationships.

It’s invaluable and empowering for artists to have aligned financial support and regular access to capital. We believe this approach is right for the times ahead and, in the coming years, will be a contributing factor in helping artists to achieve their professional and personal aspirations.”

Joining Diener and Lipson on the Alignment Artist Capital Board of Directors is Matt Botein, Global Co-Head and Chief Investment Officer, BlackRock Alternative Investors, and BAI Managing Director Patrick Riordan, who spearheaded this investment on behalf of BlackRock.

“We at BlackRock are excited about the opportunity to work with Howie and James to support leading artists in today’s highly dynamic music industry. As the music industry continues to evolve and innovate, we believe there is tremendous opportunity to provide new, creative forms of financing based on new business models and revenue sources,” said Botein.

“The founders of Alignment have already proven their ability to anticipate trends and create modern business models to thrive in today’s dynamic global market. We are pleased to be working with them.”

BlackRock Alternative Investors manage more than $110 billion on behalf of institutional investors, financial institutions and ultra-high net worth families across a wide range of investment strategies.

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