Exclusive: Owner of Legião and Mamonas catalogs sold for R$150 million
The Adaggio fund — raised in 2021 by Arbor Capital to buy music copyrights — has just been sold for R$ 150 million, sources familiar with the matter told the Brazil Journal.
The buyer was an international financial investor specialized in the segment and previously not present in Brazil.
According to a source, the transaction value is 2x the amount invested by Adaggio to buy its 150 catalogs, which contain more than 140,000 songs.
Adaggio’s catalog includes artists such as Dado Villa-Lobos, the guitarist of Legião Urbana; Jorge Aragão, a prominent figure in samba; and Délcio Luiz da Silveira, the author of Molejo hits like “Brincadeira de Criança” and “Dança da Vassoura.”
Other artists in the portfolio are Paulinho Rezende, who composed hits recorded by Zeca Pagodinho, Alcione, and Chitãozinho e Xororó; Toni Garrido of the band Cidade Negra; Dinho, the main songwriter of Mamonas Assassinas; and Rodrigo Reys, the country music composer with several songs in Spotify’s Top 50, including “Baby, me atende.”
The transaction valuation implies a multiple of 7.5x Adaggio’s cash flow, net of taxes. For comparison, Adaggio bought catalogs in recent years paying an average of 4.5x, with transactions ranging from 3x to 13x.
The difference in multiples is justifiable.
For the buyer, the transaction will be its entry point into the Brazilian music market, one of the fastest-growing markets in the world.
“There’s a component of the valuation that is discounted cash flow, but there’s an important component of buying an established business with all the relationships in the music industry,” said one source. “They’re not just buying the catalogs, but a platform already set up for them to allocate more capital.”
As part of the agreement, Adaggio’s main executives will continue to lead the business, including CEO João Luccas Caracas, better known in the music industry as DJ Beowulf.
For the fund’s investors, the net return from the sale will be 23% per year — more than double the return the CDI gave in the same period (around 10%). Comparing to the Ibovespa is not even fair: in the last three years, the index has only increased by 17%.
The largest investor in Adaggio is Atmos Capital, which anchored the fund and participates in the board, being directly involved in the sale negotiations.
Talks for the sale began over five months ago but intensified in the last two months. Adaggio even spoke with another player in the sector with a similar financial profile.
The fund’s thesis has always been to buy timeless catalogs, focusing on genres like samba, MPB, pagode, and gospel.
Arwen Volkov, A graduate of the University of St. Gallen in Switzerland with a degree in International Finance, Arwen specializes in sustainable finance and green investments. She began her career at an investment bank in London, where she developed financing models for environmentally friendly projects. Known for her analytical and strategic thinking skills, Arwen is a sought-after financial consultant. In her spare time, she mentors fintech startups, contributing to their growth strategies. She is also a nature enthusiast and an amateur photographer.