Pitching Picasso to the masses: Artex plans exchange for artwork

A LIECHTENSTEIN prince and a team of investment bankers are rolling out a marketplace for trading shares of artwork – a bet that investors will embrace paintings as an asset class, even if they will never be able to hang a masterpiece in their homes. 

Artex aims to list its first painting in the first half of this year, said chief executive Yassir Benjelloun-Touimi, the former UBS Group and BNP Paribas banker who co-founded the platform with Prince Wenceslas of Liechtenstein. 

While he declined to identify the artwork, he said that it was by one of the most famous artists of all time, whose works remain out of reach for all except the uber-rich.

“There are only a very few lucky, smart people who have had access to the art market over the last 500 years, and what we are trying to do is move it to a regulated, accessible and safe platform,” he said. 

Artex will join the field of fractional-ownership marketplaces, which split assets ranging from diamonds to vintage cars into affordable shares. The platform Masterworks, for example, securitises paintings by artists such as pop culture icon Andy Warhol and street art star Banksy.

Benjelloun-Touimi said that Artex will be different from its peers because it will be structured like a stock market: Works will be listed in a process similar to initial public offerings, with banks marketing paintings to their clients. There will also be a secondary market with real-time prices and brokers who stand ready to buy or sell.

Masterworks, in contrast, holds an artwork for three to 10 years, and then sells it and distributes the proceeds to shareholders. Investors have the option to sell their shares in a secondary market, but Masterworks cannot assure them that there will be willing buyers.

One risk for Artex is that liquidity could be thin, even with market makers. This means that it could be difficult to buy or sell without moving the price sharply.

Unlike listed companies, which typically publish quarterly earnings, Artex might not generate enough news to change investors’ views on the value of a work. This will impact trading opportunities.

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The platform will be a test of whether art belongs in investor portfolios alongside stocks and bonds. Some personal-finance experts are sceptical, saying a Renaissance painting has no cash flow or dividend attached to it, leaving ownership as pure speculation.

But Benjelloun-Touimi believes the emergence of the asset class will lead to brokers developing and marketing research. As with commodities such as gold, price moves could be triggered by factors such as interest-rate changes, inflation data and new sales at auction houses.

But suspicion remains. Looming over Artex’s ambition is a long history of promoters pushing arcane investments – from high-end wines to rare manuscripts and, more recently, non-fungible tokens – that turned out to be flops.

While art-price indexes have risen over the decades, there is no guarantee that investors will be able to identify which works will gain in value.

“These atypical investments require real expertise from investors,” said Pascale Micoleau-Marcel, head of La Finance Pour Tous, a French association dedicated to educating investors about finance and banking.

Artex plans to address concerns related to the value of a painting through strict selection criteria. Only works by the most famous artists from the last five centuries – from Leonardo Da Vinci in the Renaissance to Pablo Picasso in the 20th century – will be chosen for listing.

Benjelloun-Touimi said that a target value of 50 million euros (S$71.6 million) and brokers acting as market makers should ensure sufficient liquidity. He added that partnering established finance firms and adhering to European Union regulations should also help reassure investors.

He said Artex plans to list at least one painting a month.

Investment bank Rothschild & Co will work as an adviser to Artex when paintings are listed on the exchange, while Six Swiss Exchange will provide clearing services. Artex is licensed by the financial authority of Liechtenstein. BLOOMBERG