A Chinese billionaire has found a way for the Chinese middle class to invest in the fine art market. His plan is either brilliant, or madness.
Chen Tianqiao and his wife Chrissy Luo made their fortune through online gaming developer Shanda – the two would have no trouble financing a Picasso or almost any other piece of fine art they desired.
But Chen doesn't want to do that. Instead, he wants others to do it for him – specifically, those who dream of owning a masterpiece, but don't have the financial wherewithal for one.
That's where Chen's intriguing idea comes in, according to the «Financial Times» (story behind paywall).
Divvy up Picasso
He wants to divvy up the Picasso – only virtually. Chen wants to securitize and sell certificates in the artist’s work, creating a partial ownership while tapping a wider market of art investors than the ultra-rich.
Chen cites a $100 million Picasso painting that is out of reach to most art buyers except the ultra-rich.
«How [about] if we securitize to 100m shares and each share is $1? If you buy 100 shares of each Picasso painting, that will be a portfolio for Picasso,» he is quoted in the «FT». Investors would not only partially own a piece of fine art, but also profit when the value of the work rises.
Chen says he is thinking of investors in China, where western artwork is generally considered a status symbol. Chinese investors have also increasingly sought investments outside the mainland in recent years.
Sotheby's Demurs
Chen Tianqiao has already positioned himself to implement the idea: Shanda was until recently a key investor in auction house Sotheby's, and Chen floated the idea to Sotheby's head Tad Smith at a private dinner.
Smith's reception of the idea isn't public, but his response suggests the auction house would demur on issuing securities on the fine art it deals in.
«From our time together, it was clear that he would be a stimulating and innovative shareholder to any enterprise,» Smith said of Chen, who now holds stakes in mutual fund house Legg Mason and Lending Club, an online lender, through Shanda.
