April 22 (Reuters) -

Blackstone made a potential offer to buy Hipgnosis Songs Fund 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, 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 catalogs to HSC on valuation concerns. ($1 = 0.8076 pounds) (Reporting by Prerna Bedi and Yadarisa Shabong in Bengaluru; Editing by Sherry Jacob-Phillips)