Forum Auctions team up with Unbolted to create ground-breaking finance facility
Innovative move has the potential to transform access to the fine art auction market for a far wider range of buyers and sellers, says
Forum Auctions have followed up their £1m-plus July launch sale by pioneering a new type of finance deal to help a collector acquire an £850,000 Shakespeare First Folio.
Stephan Ludwig, CEO of Forum Auctions, London’s new auction house for books and works on paper, has an extensive background in corporate finance and believes that the innovative transaction has the potential to extend liquidity for the acquisition of collectibles to a far wider client base of collectors and traders than ever before.
Forum have teamed up with Unbolted, the peer-to-peer lending platform, to create this structured finance product. Unbolted offer short-term loans secured on luxury assets looking primarily to the asset value to determine lending criteria.
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In simple terms, Forum and Unbolted have developed a point-of-sale financing facility whereby Unbolted has advanced the money to buy the folio via private treaty, with the collector consigning other material from his collection for dispersal via Forum to repay the loan.
This hybrid arrangement bears similarities to both the generic market for asset-backed loans used to fund everything from business deals to auction purchases and to auction advances offered by the global auction houses for blue-chip trophy art.
However, what Forum and Unbolted have done is to combine the two, which brings advantages to all those involved.
For the collector, it means immediate access to the target purchase at short notice when the asset becomes available for purchase, but without the worry of first having to raise money.
For Unbolted, sub-contracting the valuation, storage and disposal of the collector’s collateral to Forum means that it can offer highly competitive loan rates.
And for Forum, the facility brings new buyers and sellers, fresh material and increased revenues, which means they can also offer the collectors who sign up to the service more favourable terms than they would get from traditional auction advances.
This means that the service can be extended well beyond the Ultra High Net Worth audience that has had exclusive access to the advantageous auction advance and guarantee system until now.
Ludwig, who started his business career as an investment banker with Credit Suisse and subsequently Nomura Securities, was a founding shareholder in The Fine Art Auction Group, taking on the role of Executive Chairman in 2007 and expanding the group to a UK ‘top 5’ market position before selling to Stanley Gibbons Group PLC in 2013.
After leaving Stanley Gibbons in late 2015 to look for new challenges, he launched Forum Auctions this summer, with a blockbuster £1m-plus two-day sale in London of books and works on paper that included an exceptional collection of books and letters by Evelyn Waugh.
The Unbolted deal is the latest in what he promises will be a series of innovations at Forum, which works in partnership in London, New York and Italy with Philobiblon, the Contemporary art, books and works on paper specialists.
“Whilst lending against art collateral has become an arguably generic private banking service, the use of a credit-rating agnostic online financing platform establishes a new frontier in this market. This tripartite transaction is highly innovative and opens opportunities for access to increased liquidity for the acquisition of collectibles by a far wider range of both collectors and traders.” says Ludwig.
“We have been exploring how the auction market can best engage with the P2P lending market for some time,” he says. “This transaction demonstrates how significantly the continued expansion of services offered online can translate into transactional products that we are able to offer our customers. We are pleased to be working with Unbolted and have a series of further transactions in the pipeline.”
Unbolted co-founder Rito Haldar says: “We established Unbolted in 2015 as an alternative financing tool for the luxury asset market. We saw that individuals and small businesses could not borrow at affordable rates unless they had existing private banking relationships. We developed an efficient peer-to-peer platform which enables Unbolted to lend at market-leading rates to a wide range of borrowers, both individuals and businesses, by focusing purely on the value and liquidity of the underlying collateral.”
On the partnership with Forum Auctions, Rito said “We believe that the auction industry can leverage us to better serve their customers, both buyers and sellers. We have enjoyed working with Forum Auctions on this transaction and look forward to developing other relevant products with them over the coming months.”