Brookfield Bets $2 Billion on Music in Deal With Primary Wave

Unlike Primary Wave’s existing funds, which have a typical 10- to 12-year lifespan, the new vehicle is structured to hold catalogs as long as it wants to have them and never has to sell. The deal also brings on Creative Artists Agency as a strategic partner and minority investor in Primary Wave, tapping the talent agency’s film, television, theatrical and branding teams to help market and find uses for the acquired copyrights.

“It means there isn’t any good acquisition that we couldn’t do in the music business,” said Primary Wave Chief Executive

Larry Mestel.

“We’re not limited by size or opportunity.”

Already, the new outfit, which the companies say has several deals in the pipeline, has acquired all of punk icon

Joey Ramone’s

music-publishing assets for around $10 million, according to people close to the transaction. The acquisition includes the Ramones frontman’s songwriting interests in “I Wanna Be Sedated,” “Sheena is a Punk Rocker,” and “Rock ‘n’ Roll High School.”

Brookfield

and Primary Wave began discussions about a tie-up in the spring as the publisher—about halfway through investing with its third fund—was looking to raise more capital. The conversations centered on creating a company that could hold music assets in perpetuity.

“Increasing demand for content from streaming services and social media make iconic music IP a scarce and irreplaceable asset,” said

Angelo Rufino,

a managing partner at Brookfield, pointing to how music is being licensed to Peloton, TikTok and the metaverse. “One of the cheapest forms of entertainment is going to keep finding ways to weave itself into our everyday consciousness and that just means more revenue.”

Primary Wave’s acquisition business differs from the buy-and-hold strategy of many of the market’s newer players. The company, whose three funds hold some $2.1 billion in value, typically takes controlling interests in catalogs—often joining with artists or their estates—and then works to actively increase the value by commissioning biographical films, Broadway shows, interpolations and brand deals. Since taking a 50% stake in the Whitney Houston estate three years ago, Primary Wave has helped quadruple its income, through endeavors such as Kygo’s “Higher Love” hit featuring Ms. Houston’s vocals recorded in 1990, a MAC cosmetic line and a coming biopic, “I Wanna Dance With Somebody.”

Its other interests across recorded music and publishing include

Bob Marley,

Stevie Nicks,

James Brown,

Prince,

Ray Charles,

Smokey Robinson

and Sun Records. Primary Wave has done deals worth $300 million so far this year, and expects to complete another $600 million in pending transactions before the year is up.

While Mr. Mestel’s charge remains largely the same for investments with Brookfield—focusing on controlling interests in iconic catalogs—the companies say they see opportunity expanding to artists in international markets such as Mexico, India and Brazil, as well as joining with local music-rights management in those territories.

“This is largely today a more Western-focused business,” said Mr. Rufino. “There are some of these artists with hundreds of millions of followers but are local to their country. There are many ways to grow this.”

Eventually, Brookfield could also purchase the assets from any of Primary Wave’s existing three funds. Already, the new vehicle has bought over $700 million of music rights from Primary Wave’s first and second funds.

Primary Wave, a company of 80 employees, holds some 50,000 copyrights, while some major music publishers have millions to manage.

“I don’t want a million copyrights,” Mr. Mestel said. “I’m only interested in the best.”

Write to Anne Steele at Anne.Steele@wsj.com