April 22 (Reuters) -

Blackstone made a potential offer to buy Hipgnosis

Songs Fund ( HPGSF ) for about $1.5 billion, outbidding

Apollo-backed Concord and triggering a takeover battle for the

owner of music rights by artists including Shakira and Red Hot

Chili Peppers.

Hipgnosis shares rose 10% to 1.01 pounds ($1.25) in early

trade, their highest level since September 2022. Blackstone's

fourth and latest proposal valued Hipgnosis at $1.24 per share

in cash, higher than Concord's $1.16 a share bid.

Music rights investment firm Hipgnosis said on Monday it

would recommend a higher Blackstone bid if the world's largest

private equity firm were to table a formal offer.

Blackstone is a majority owner of Hipgnosis Songs Management

(HSM), the fund's investment adviser, which holds a call option

to purchase Hipgnosis' portfolio of songs if their investment

advisory agreement was terminated.

Hipgnosis Songs Capital (HSC), a partnership between HSM

and Blackstone, owns rights to music by Justin Bieber, Nelly

Furtado and Justin Timberlake, among others.

Hipgnosis had last week agreed to the $1.4 billion deal with

Concord.

"The Board and its advisers will continue to provide

Blackstone and its advisers access to confirmatory due

diligence, to enable Blackstone to announce a firm intention to

make an offer, as soon as possible," Hipgnosis said.

Hipgnosis Songs Fund ( HPGSF ), founded by industry veteran and former

CEO Merck Mercuriadis, launched a strategic review last year

after a shareholder revolt threw its future into doubt.

The London-listed firm has since been in dispute with

HSM, which is chaired by Mercuriadis, over the call option.

Shareholders in October had rejected the fund's proposed

$440 million deal to sell 29 catalogues to HSC on valuation

concerns.

($1 = 0.8076 pounds)