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Blackstone Tests Longer Investment Horizons in SESAC Buy

The Blackstone Group LP has agreed to buy music rights organization SESAC Holdings from fellow private equity firm Rizvi Traverse Management, the companies said Wednesday, in a deal that marks Blackstone’s first foray into the world of longer investment horizons.

The financials of the transaction, which is expected to close in the first quarter, were not disclosed. The deal sees Blackstone pick up a company in SESAC that offers public licenses for the works of its affiliated writers and publishers, which includes well-known artists including Bob Dylan, Green Day and Mariah Carey, among many others.

The transaction represents the first investment from Blackstone’s so-called core private equity fund, which will hold onto portfolio companies for longer than traditional 10-year private equity funds, according to a statement.

John Josephson, chairman and CEO of SESAC, said in a statement that the company is “excited to partner with Blackstone,” explaining that the idea of teaming with a private equity firm that intends to oversee the company for longer than usual was “especially attractive.”

“Blackstone is acquiring our company with the specific intent of backing the existing management team, and shares our long-term vision for the company with a history of adding value to their portfolio companies as a supportive strategic partner and capital provider,” Josephson said.

SESAC, which originally only provided services to the U.S., recently expanded its activities internationally through the launch of MINT, a joint venture with SUISA, a Swiss company that helps songwriters, composers and music publishers collect royalties. MINT licenses and administers music rights to digital music platforms on a pan-European basis.

Robert Reid, senior managing director at Blackstone, said in a statement that the firm is “thrilled” to join forces with what he called “the most progressive music rights organization for songwriters and artists.”

“Music is fundamental to our society and is consumed both actively and passively by users worldwide, across increasingly diverse methods of distribution,” Reid added. “We expect music listenership to continue to grow over the long-term and are excited to invest in SESAC, one of the key facilitators of the music market and related copyright management infrastructure.”

The sale of SESAC marks the end of roughly four years of Rizvi ownership, with the private equity firm having acquired the company in January 2013, according to its website.

Blackstone Core Equity Partners is one of a few funds on the market right now that are testing the idea of longer investment horizons, which experts have detailed as a budding trend for the past few years. As of October, the Blackstone fund was targeting $5 billion from investors, with an expected lifespan of 20 years, according to private equity research management firm Preqin.

Allen & Co. LLC is acting as financial adviser to SESAC, with Akin Gump Strauss Hauer & Feld LLP acting as its legal counsel.

Moelis & Co. LLC and AGM Partners LLC are acting as financial advisers to Blackstone, with Kirkland & Ellis LLP acting as the firm’s legal counsel.

The Kirkland team was led by corporate partners Peter Martelli and Daniel Layfield and associates Keri Schick Norton, Michelle Miao and Brett Dovman; tax partner Mike Beinus and associate Adam Kool; debt finance partner Melissa Hutson and associate Yuli Wang; litigation partners Ian John, Michael Becker and Claudia Ray and associate Phil Hill; technology and IP partner Seth Traxler; labor and employment partner Richard William Kidd and associate Tatum Ji; employee benefits partner Melissa Renae Grim; executive compensation partner Michael Krasnovsky and associates Julia Onorato, Kate Coverdale and Laura Gallo; real estate partner Jennifer Sheehan; and environmental transactions partner Toby Chun and associate Jennie Morawetz.

Goldman Sachs Group Inc. is acting as financial adviser to Rizvi.

Jefferies is providing debt financing related to the transaction.