The Fine Art Group, a leading independent global advisory firm, has acquired the art-lending division of the specialist financier Falcon Group. No figures have been released for the acquisition.
Falcon Fine Art was launched by Kamel Alzarka in 2014, as a division of his Falcon Group, which offers alternative financing options for businesses. The group has offices in 10 cities including London, Singapore, Auckland, and Jakarta. In a recent interview, its business development manager Steve Box said that the group has so far “deployed over $8 billion in the last three years”. Their practice involves charging annual interest rates in the “mid-single to high-single digits”. Similar to other boutique lenders and unlike banks, they use art as collateral instead of the client’s assets. The company has a $300 million credit fund to finance loans for high-net-worth clients, institutions and large family offices.
For Falcon Group, the sale of Falcon Fine Art “made perfect sense, as we continue to focus on the growth and expansion of our core business,” Chairman Kamel Alzarka said in a statement.
When initially launched, Falcon Fine Art had around $200m allocated for its operation, with a goal of building a $500m loan portfolio by 2019. They didn’t release the size of the book today due to confidential legal obligations but confirmed that the deal involved the “purchase of over 10 loans” with “borrowers in the EU stretching as far as Australia, with collateral in a major American institution.”
Their book contains more than 10 loans to clients in the UK and Europe. Collateral includes works by Pablo Picasso, Andy Warhol, Alberto Giacometti and Wassily Kandinsky.
This serves as a leading sign of consolidation in the art finance industry, which has seen an increase of newcomers recently. The majority of this business, valued at $16-20bn, is in the US, where Falcon does not operate.
In the press release announcing the acquisition, chief executive Freya Stewart said: “This inaugural art-financing business consolidation strengthens our long term commitment to being the leading art finance provider to collectors and owners of high value art globally. This is an exciting time for our business as demand for our art financing product increases.”