BMG/KKR Venture Mulls Investment Options

FRANKFURT (Reuters) – BMG Rights Management, the music venture owned by Bertelsmann and KKR, is looking at a number of potential investment projects backed by bank credit of up to 600 million euros ($852.2 million), a German paper reported.

BMG was looking at around 38 prospects to invest in and had received loan promises from a consortium of eight banks led by JP Morgan (JPM.N), Financial Times Deutschland quoted BMG head Hartwig Masuch as saying by in an interview published on Friday.

“The investment pipeline is full. We have plenty of (financial) funds,” Masuch told the paper.

According to the report the financial sector has speculated the the credit range was between 500 million and 600 million euros.

“That’s about the scope of it,” Masuch said, adding that more music catalogues were on the market and at cheaper prices than two years ago.

German media giant Bertelsmann AG and private equity firm Kohlberg Kravis Roberts & Co. announced the BMG Rights joint venture in July 2009, saying it would be a more efficient way of managing music rights under one roof.

KKR has committed to investing about 250 million euros in the business in which it owns a 51 percent stake. Bertelsmann owns the remaining 49 percent.

The companies have indicated they would be prepared to raise extra funds to acquire a major catalogue of songs if one became available.

Pension funds and private equity funds are increasingly attracted to catalogues of published songs due to their steady, recurring cash flows amid falling CD sales and as piracy hits profits in the music industry. ($1=.7040 Euro) (Reporting by Nicola Leske)