It is being reported by Bloomberg that The Weeknd, aka Abel Tesfaye, is seeking $1 billion in financing by using his back catalogue as collateral.
It’s a move that will see him be able to access capital without selling his rights (though 50% of his publishing is owned by an investor group called Chord Music Partners). If it goes ahead, it will give Tesfaye $250 million in cash, but leave him $750 million in debt.
It remains to be seen what sort of business ventures Tesfaye needs the $1 billion for – possibly something connected with his production company, Manic Phase. But how will he pay back the $750 million?
He’s cashing out $250 million in equity from his catalogue now, meaning he won’t have that option later. It’s a gamble in which much depends on the continued popularity of his music.
Starboy and Blinding Lights have clocked up Spotify plays and Youtube hits in the billions. But will they – or indeed Tesfaye’s future music – be as popular in ten years' time? Especially as he has suggested that he will retire The Weeknd name soon.
Another unusual aspect to this deal is that it has reached the press before it has been finalised - usually investor groups only advertise a sale like this after it has been completed.
Assuming it does go ahead, there are only two ways this goes: either Tesfaye becomes a very rich man indeed, or he’ll be bankrupt and playing live on the nostalgia circuit in ten years' time...
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