KEY POINTS:
SYDNEY - The Commonwealth Bank of Australia (CBA) is proving you can boogie and finance at the same time, buying the 1976 Trammps hit Disco Inferno and the copyrights to 25,000 other songs to put into a new investment product.
Other songs in the deal include the John Denver classic Take Me Home Country Roads and Bobby 'Boris' Pickett's 1962 novelty song Monster Mash.
CBA's funds management division, Colonial First State Global Asset Management (CFS,) announced today it had agreed to buy the copyrights from Dimensional Music Publishing LLC, for an undisclosed sum.
"We can't mention the exact amount for confidentiality reasons, but it's one of the largest independent catalogues out there," CFS chief executive Warwick Negus told AAP.
"And certainly when we go to market we will have assets of A$150 million ($171.8 million) to A$200 million in the fund, of which this will be the most important asset."
The song catalogue was compiled originally by a division of Steven Spielberg's film company Dreamworks SKG, which then sold the songs to Dimensional in 2004.
It also contains works by the Byrds, Leon Russell and more contemporary artists such as Alien Ant Farm.
Due to be launched late in 2007, the CFS fund housing the songs will target sophisticated investors -- initially from Europe -- looking for high-yield, high-growth assets.
Income will be generated from royalty payments from CD sales or when any of the 25,000 songs is played on the radio, in a film or advertisement.
Use of the songs in written transcripts on the internet or in books will also generate income.
Mr Negus said additional assets to be added to the media fund would be of a similar, income-generating quality.
"So, per se, we won't be acquiring a television station," he said.
"We'll be looking more at assets like films or music that have that income generating element."
The parent company of Dimensional Music Publishing, New York-based Dimensional Associates, is the private equity arm of JDS Capital Management Inc.
Mr Negus said offering song copyrights in a managed fund was a "reasonably unique" proposition.
Music has been used in an investment product before.
In 1997, the Prudential Insurance Company bought bonds issued by rock musician David Bowie for US$55 million.
The Bowie Bonds are asset-backed securities of revenue generated from the first 25 albums recorded by the artist.
- AAP
