Expat Global Art
Risk profile: High risk
Investment focus: Investments in global artworks
Minimum investment: 100 BGN (51 Euro)
Expat Global Art is organized as a joined-stock company with two types of asset classes, where the Fund’s portfolio is made of artworks of artistic, numismatic, and philatelic character. The Fund gives an alternative exposure of such shares to its investors enabling them to benefit from the rising prices of artworks in the medium and long-run.
Expat Global Art AD is registered at the Trade Register on the 5th of March 2019, with UIC number 205550338 with asset classes “A” and class “B”. Every class “A” stock is given the right of a single vote in each shareholders meeting, with a limitation (without the right) of the liquidation share, and with a reduced portion (without the right) in the distribution of dividends. Every class “B” stock is not given the right of voting with a redemption preference, under the terms and conditions defined in the Fund’s Articles of Incorporation, with a privilege in the liquidation share specified in the Fund’s Articles of Association; with a dividends distribution privilege specified in the Fund’s Articles of Association and subject to compulsory cancellation under conditions laid down in the Fund’s Articles of Association. The stocks of class “A” are vinculated shares. The stocks of class “B” are freely transferrable. Class “B” shares are designed to give investors an opportunity to invest in a portfolio of artworks through the Fund and make a profit via it. Class “B” shares carry all the economic benefits of the Fund’s activities. Class “A” stocks are designed to control the Fund’s activities. They do not bring an economic benefit from the Fund’s own operations to its owners.
The Fund will actively manage its portfolio of artworks with regards to the supply and demand (trends) on the art market, which will be constantly monitored. In addition, it will seek to diversify risk through investments in a large amount of different artworks from various classes, styles, periods and geographical locations, that is not always possible even for professional participants in this market.
The Fund adds value to its investors in multiple ways:
1. Access to artworks as a separate asset class usually difficult to access for the mass investor and for institutional investors
It would be difficult for a classic investor to directly use artworks in their investment strategy to diversify risk or to achieve higher returns. The lack of expertise knowledge in the market, technical peculiarities of purchases and sales of art, risks linked to counterfeiting and storage, as well as a lack of competency in the trends of the market, make artwork as an investment grade difficult to access for non-professionals. Institutional portfolio investors, by definition, normally cannot hold tangible (physical) assets (assets that are not financial instruments) in their portfolios and cannot directly participate in this market. The fund would be suitable for portfolios of such institutional investors that are seeking risk diversification in asset classes with low correlation to capital markets. The features of art as an investment class make it suitable for longer-term investment strategies.
2. Access to promising artists who have the potential to become famous in the medium-term
Expat Global Art will enable promising, but not very well-known, artists to make their first deals with their own works so that, on the one hand, they get a validation that they are marketable and can make price discovery of their art, and on the other hand, be given the opportunity to promote and display their works in the Fund’s online gallery or in more famous galleries and museums with which the Fund will have relations. In order to provide this opportunity, the Fund will seek to purchase a number of artworks from a particular artist at bargained prices, which, after popularizing, it sells, with significant profits for its shareholders.
3. Access to collections of artworks, the owners of which would like to replace them with more liquid financial instruments
In Bulgaria, and not only, there are many collections of artworks, which for various reasons are owned by owners who are uninterested in their development and maintenance. Many of these owners aren’t professional participants in the art market and the liquidation of these collections is not easy for them. Expat Global Art will endeavour to offer acceptable terms of purchase of en bloc collections and at the same time will offer them to subscribe, if they wish to do so, shares from the Fund in the primary market for an amount equal to or similar to the transaction price. This would lead to a natural growth of the Fund’s assets and the size and diversification of its portfolio of artworks while allowing collectors to replace all or part of their collections with a lower risk and liquid investment product, being the shares of the Fund.
4. Achieving better conditions for the purchase and sale of art objects
The Fund, as a larger, professionally managed and publicly known owner of artworks, will be able to achieve significantly better price conditions upon purchase and sale of artworks than individual players usually can in the market, even those, who consider themselves professionals.
5. Income from rentals, loans and exhibitions of artworks
Expat Global Art will adopt the practice of exhibiting artworks from its portfolio in galleries, museums, and thematic expositions in various other institutions (including through longer-term rental or lending contracts of artworks). Revenues from such activities will benefit investors in the Fund. The exhibition of works owned by the Fund will also contribute to their popularization and to raising the reputation of their authors, which will also lead to an increase in their market value.
6. Access to artists from different countries
As an institutional investor, the Fund will have easier access to different artists from different countries, as opposed to an individual investor. This will lead to better opportunities and conditions for purchases and sales of artworks. Moreover, the higher public profile of the Fund will make it a natural potential partner for other small or large market participants who will look for it as a potential buyer or seller of works. In particular, Expat Global Art will seek to make profitable art purchases from countries where prices are low and investment interest in the asset class is lacking, and sell them in the markets where prices are high and investment interest in the asset class is more widespread.
7. Value and authenticity guarantee, risk management and diversification
The professional management of the Fund, comprising of the cooperation with professional consultants, valuers, insurers and custody institutions for its assets and documents, will be a guarantee of the value and authenticity of the works of the portfolio.
|Summary as of 25.06.2019|
|Net asset value per class B share||BGN 113.7302|
|Net asset value of class B shares||BGN 1 234 540.9600|
|Class B shares outstanding||10 855|
Net asset value per class B share dynamics of Expat Global Art
slide left and right