Artex, a new “online exchange for art”, will offer its first initial public offering (IPO) at an event at the Victoria & Albert Museum in London on May 30.
Yassir Benjelloun-Touimi, co-founder of the exchange with Prince Wenceslas of Liechtenstein, remains tight-lipped about the first proposed work, but says they are initially focusing on coins in the “50 million and above range. “, the majority of them Impressionist and Modern.
“We need artists who have passed the test of time, whose works are set up as trophies. This will provide maximum security,” Benjelloun-Touimi said, noting that “provenance is much easier to track” with Impressionist and Modern art. Expect Van Gogh, Monet, Picasso and Cézanne. For now, they will avoid Old Masters, which tend to be harder to find and authenticate. “We don’t have the luxury of selling a fake and outliving it,” adds Benjelloun-Touimi. Eventually, art IPOs by top contemporary artists will also be offered.
The trade is set to begin in early July, with the intention of listing more than €1 billion worth of art over the next few months.
So how will this work?
Kind of like a traditional stock exchange, says Benjelloun-Touimi, a former hedge funder who held senior positions at UBS and Bank of America Merrill Lynch, among others. He notes that Artex, which is based in Lichtenstein, is regulated by the Liechtenstein Financial Markets Authority with bank-backed IPOs. Investment bank Rothschild & Co is advising the exchange.
All the artworks – or art IPOs – are owned by Artex, which will issue the shares, worth €100 each. These shares can then be bought, sold or traded on a secondary market on the Artex stock exchange. Shareholders are limited to a 10% stake in each work; anything above that threshold triggers a takeover bid, which could be overbid in the same way an auction works.
Instead of investors being able to hang the works in their homes or offices, all works owned by Artex will be made available to museums – terms pending – for temporary loan.
“We will use some of the money we earn to help cultural institutions that are struggling to survive,” Benjelloun-Touimi says. “We will also support them in the restoration of works of art and the financing of catalogs raisonnés. Meanwhile, the value of a loaned work will likely be increased “by being part of a story”.
The gold standard
Art has long been considered an asset class, so how does it compare to other investments?
According to a 2020 Citi report, between 1985 and 2020, contemporary art investors enjoyed annualized returns of 11.5%. During the same period, gold investment assets only returned an average of 3.2% per year.
Longer term, Benjelloun-Touimi expects returns from its IPOs to be “close to gold”, with macroeconomic indices such as interest rates affecting performance.
However, there is plenty of room for art as an asset class to grow, Benjelloun-Touimi thinks. As he says, “We go from an art market that is only reserved for 500 to 1,000 people and we open it up to millions. The natural course of history says this should push prices up.
The former banker acknowledges skepticism around other attempts in the art world to split ownership, including NFTs that have crashed and burned over the past two years. He is also quick to point out that art exchange is very distinct from art funds, which traditionally acquire and sell works of art.
“Artex could be seen as disruptive to the art world,” says Benjelloun-Touimi. “But, rather than cannibalizing what exists, we are making the cake bigger. There’s $3.5 trillion worth of art, and the art market is only about $60 billion. We could build a real economy around that.
Although the reported numbers are huge, Benjelloun-Touimi insists that art IPOs are not for the 1% investor. In fact, quite the opposite. He says, “We are democratizing access. Our offers are accessible to individuals, private banks and institutional investors. We’re trying to create a new kind of patron who doesn’t have to be wealthy or knowledgeable. They just have to give some time to decide if they want to invest.
