Mama takes $6m stake in Nettwerk

Mama Group, the small-cap live music and artist management specialist, has spread its wings into North America after buying a 20 per cent stake in Nettwerk Music Group, which manages the likes of the Canadian bubblegum pop singer Avril Lavigne and the gypsy punk band Gogol Bordello.

The deal will create the world's largest artist management business. Terry McBride, chief executive of Nettwerk, said: "We believe that this alliance will make us the most attractive home for music artists."

Nettwerk, based in Vancouver, was founded in 1984 in Mr McBride's apartment initially to release albums by one of the founder's bands. Over the past 23 years, the company has grown to encompass a record label focused on independent acts, most notably Sarah McLachlan, the Canadian songstress, which has racked up 30 million album sales, a publishing business and its artist management division, which handles the likes of Stereophonics and Josh Rouse.

Mama has paid $6m to secure a stake in the Canadian company, and will stump up a further $8m over the next two years if Nettwerk hits a series of profit targets. Mama expects the deal to bolster its revenue in fiscal 2009.

Adam Driscoll, co-chief executive of Mama, said that Nettwerk has been courted by a number of major music players over the past few years but the similarity in the business model of the two companies helped to secure the deal.

He said that the acquisition was an important step in Mama's strategy as it enables the company to enter the North American market and reap the benefits of increased scale but without the associated risks in sinking large amounts of money into setting up infrastructure.

Mama manages artists including Franz Ferdinand and Kaiser Chiefs and owns venues including the Hammersmith Apollo and The Forum in Kentish Town. It recently acquired a number of Mean Fiddler venues.