PRIMARY WAVE ADDS
$2B FUND

Brookfield Asset Management has made its first step into the music-catalog business, striking a $2b deal with Primary Wave Music. The asset manager is acquiring a minority interest in Larry Mestel’s company and funding an acquisition vehicle with $1.7b.

The first purchase is a stake in the catalog of the late Joey Ramone, which includes “I Wanna Be Sedated,” “Sheena Is a Punk Rocker” and “Rock ‘n’ Roll High School.” Terms of the deal include nonexclusive rights to license Ramone’s name and likeness, as well as income for songs in The Ramones' repertoire.

Creative Artists Agency is also investing in Primary Wave, becoming a strategic partner.

“Brookfield is among the most intelligent and well-financed dealmakers in the world,” said Mestel, founder and CEO of Primary Wave. “What separates it from every other financially oriented investor of its size is its creativity, long-term horizon and ability to help scale unique businesses with operational expertise in addition to capital. The addition of the CAA team to the Primary Wave family provides artistic, creative, relationship and content-creation clout unheard of in the music-publishing space.”

The new fund puts no limit on how long Primary Wave can own a catalog; its existing funds tend to limit a holding to a 10- to 12-year shelf life. “There isn’t any good acquisition we couldn’t do in the music business,” Mestel told The Wall Street Journal. “We’re not limited by size or opportunity.”

Primary Wave’s management team will continue to control the company and will invest a majority of the Brookfield funds in the permanent capital vehicle through continued acquisition of IP, creating a long-term vehicle holding company to leverage PW's extensive marketing, branding, digital strategy and content-creation teams.

In all, Primary Wave has three funds worth $2.1b. The new vehicle has purchased more than $700m in music rights from its first and second funds. Down the road, Brookfield could also purchase assets from any of the three.

WSJ further reported that Primary Wave has done $300m in deals this year and expects to finalize another $600m before year’s end.

The standard practice is to take a controlling interest in a catalog, then work to set up biopics, stage shows, interpolations and brand deals. Mestel’s company has several projects nearing completion, including the Whitney Houston biopic I Wanna Dance With Somebody, the James Brown A&E docuseries Say It Loud, the recently announced Melissa Etheridge off-Broadway production and the expansion of the Sun Diner.