GalleriesInstitutions 09-10-2015

Sarkozy to finance your next acquisition

Good news for those wondering how to finance their acquisitions at major fairs and sales this fall. Carlyle and Pictet have joined forces to issue lines of credit dedicated to the acquisition of artworks, artworks as guarantees...without recourse.



Athena Art Finance Corp, tell me more?

Athena Art Finance is a new New-York based company founded this year with aims to "improve transparency and liquidity in the art market", according to its CEO, Andrea Danese, a structured finance veteran. The company’s total capital stands at $280 million from its two shareholders, The Carlyle Group and Banque Pictet.
 

Why this Swiss-American union?

With its $193 billion in assets under management and 287 funds, and funds of funds, The Carlyle Group is one of the most important alternative investment funds today. The group has recently exited funds worth $1 billion.

The private Swiss bank Pictet, created in 1805, is well-known for its wealthy European clientèle, as well as for its contemporary photography prize.

On the one hand an American megafund specializing in alternative investments, and on the other a prestigious private European bank whose interest in art is known to everyone. A perfect team to win the race being waged by various financial institutions to turn art into an intangible asset! And thus win the illiquidity bet.

How does it work?

How did we do it before?

Athena Art Finance steals the show at the Fine Art Emigrant Bank. The American bank, founded in 1850, that issues loans against works of art, also valued at over $2 million.  Apart from the latter, the market was composed of:

  • a large number of Asian and Anglo-Saxon financial non-banks, those boutiques have less favorable terms: lines for shorter durations with double-digit rates and often requiring the work to be collateralised (with recourse).
  • a handful of private banks recognizing art as a significant part of their clients’ inheritance and accepting that this asset represents a portion of the collateral security required (often cash representing the remaining collateral).

 

What are the consequences?

In the world of finance:

Athena Art Finance has launched in a market Carlyle estimates at $7 billion,  notes the Financial Times. The newcomer wants to be recognized as the only institution that has brought financial best practices with “a true investment vehicle”, to the art world with its outdated practices, says Remy Best (Pictet). In other words, financing art is no longer an overused word. Athéna is the first institution packing a big enough punch to have a real impact on the market, when the big names in banking are often content simply to offer art advising … risk-free.

And more specifically for private banks:

For the last few years western private banks have been looking to reinvent themselves, hoping  to restore the profits of yesteryear. The economy and new regulations are not helping...How can they not look enviously on the returns the art world offers their clients? Athena Art Finance aspires to give clients back their flexibility.

In the art world:

Marion Maneker reminds us in his Art Market Monitor, that  “Leverage generally means asset prices inflate.” Food for thought to those who are alarmed by the bubble of contemporary art.

In the tabloids:

It is to none other than Olivier Sarkozy, Managing Director at Carlyle, but also younger brother of the former French president and presidential candidate in 2017, to whom we owe the paternity of Athena Art Finance. And before marrying one of the Olsen twins, Olivier dated Stella Schnabel, daughter of famous artist Julian Schnabel.

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