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Shareholders in Hipgnosis Songs Fund have overwhelmingly voted down the investment trust’s attempt to secure a further five-year mandate, throwing the future of the troubled UK-listed music rights owner into question.

The vote against the trust’s continuation at its annual meeting on Thursday will mean that its board must now review options for its future with shareholders and put forward proposals within six months. More than 83 per cent of votes cast were against the continuation of the company.

Should no agreement with shareholders be reached — and if investors insist — the trust could ultimately be wound down or sold.

Investors also voted against a deal to sell a $440mn music rights portfolio to a sister fund run and backed by private equity group Blackstone. The deal was proposed by the board last month to try to pay down debt and narrow the vast discount to its net asset value that the investment trust has been trading at.

A protest vote was also lodged against the reappointment of Andrew Sutch, chair of Hipgnosis, who has already said that he would step down from the board.

“Shareholders have spoken and sent a clear message that the status quo is unacceptable and that a total reset is required,” said Tom Treanor, executive director at Asset Value Investors. “We look forward to a refreshed board working closely with shareholders to turn the company around.”

Merck Mercuriadis, who established Hipgnosis in 2018 and is now chief executive of the fund’s investment adviser — Hipgnosis Song Management — said the AGM “marks an opportunity to reset and focus on the future”.

“Our conversations with shareholders have revealed a consensus that they are enthusiastic about the quality of the Company’s iconic portfolio of songs, however it is also clear that they are asking for change and we respect that feedback,” he said.

Sylvia Coleman, senior independent director of Hipgnosis Songs Fund, said: “While shareholders have not supported our proposed transaction or the continuation vote, it is clear that they share our belief in the inherent quality and potential of these assets. The directors are now expediting the appointment of a new chair who will drive the strategic review.”

The vote is a moment in the five-year rollercoaster for investors in the company, which owns song rights for artists such as Justin Bieber and Neil Young, as well as the fortunes for music rights as a mainstream asset class.

Hipgnosis was at the vanguard of companies seeking to buy music rights when it was founded by Mercuriadis, a former manager of stars including Beyoncé, offering investors the chance to profit from the rise in streaming revenues.

The market for music rights initially boomed, forcing the company to raise more money and pay ever higher prices as it added to its portfolio. Hipgnosis raised more than £1bn from investors in total, including the Church of England.

But investors have grown increasingly wary as higher interest rates have forced up the discount rate used to calculate asset values into the future — cutting the value of song rights and making them less attractive compared with asset classes such as government bonds.

The company has also run out of money to buy new rights, and its high levels of debt and the large discount to NAV have meant that it has been unable to raise new cash.

Hipgnosis shocked investors this month by unexpectedly pulling payment of its interim dividend after warning that its debt covenants would have been at risk from a change in royalty payments to songwriters in the US.

Investors have also questioned the relationship with Blackstone, which both co-owns the management company for Hipgnosis as well as a rival fund that is still buying song rights.

Investors on Thursday voted down a deal to sell a large portfolio of its rights to the Blackstone fund, with several shareholders telling the Financial Times that the price agreed was far too low.

On Wednesday night, the company said board directors Andrew Wilkinson and Paul Burger had resigned, meaning that they have avoided the potential embarrassment of being voted down at the AGM.