The Daily Telegraph - Saturday - Money
Own a stake in stamps, art and dinosaurs
So-called fractional ownership of collectibles has boomed in America and is now poised to take Britain by storm. Melissa Lawford reports
W‘This will appeal to people, who I suspect, have never even used a stamp before’
ould you like to own a stake in the most valuable man-made item on the planet? The One Cent Magenta is a 29mmwide stamp. This summer it was sold at auction to the British stamp dealer Stanley Gibbons for $ 8.3m (£ 6.2m). Gram for gram, it is 2.5 million times more expensive than 24-carat gold.
Soon, a portion of it could be yours. In a first in its 165-year history, Stanley Gibbons intends to break the stamp up into thousands of pieces – financially speaking – and sell it on to the masses, much like a company floating on the stock market. This autumn you will be able to buy a share for less than £50 and watch your stake rise or fall in value.
The move marks Britain’s entry into the new, booming trend for “fractional ownership” of collectible items that is sweeping across America.
Victoria Lajer of Stanley Gibbons said she hoped the sale would tap into the surge in investment after the pandemic. “This will appeal to people who, I suspect, have never even used a stamp before,” she said.
She has caught the zeitgeist. At the end of this month the British start-up Koia will set up an app that will allow users to buy shares in collectibles such as watches. Its first sale will be a champagne bottle at the start of August.
Richard Draper, a co-founder, said Koia aimed to list one asset a week, valued at up to £100,000, by the end of the year. Shares will start from €50 (£43). Koia aims to hold most items for three to five years and investors will have voting rights on future sales.
In America the sector is booming. Rally was the first company to launch, in 2017, and has 300,000 users. It has completed nearly 350,000 initial public offerings, or IPOs, across 15 types of assets. Shares in a £300,000 triceratops skull sold in 20 minutes.
George Leimer of Rally said about 20 assets had later been sold to an external buyer. These items brought shareholders 30pc returns.
After an IPO, Rally investors can trade on a secondary market and have voting rights. In June last year Rally offered shareholders a $125,000 set of Pokemon trading cards.
“We got an offer to exit the asset at $250,000. That would have been a 100pc return in 40 days. It was rejected by the vote,” Mr Leimer said. On the secondary trading market its value hit $600,000.
Advisers caution that collectibles are a rogue investment class. When the shoe designer Stuart Weitzman sold the One Cent Magenta to Stanley Gibbons in June, he lost $1.2m on the $9.5m he paid for it in 2014.
Warren Shute, a financial adviser, said investments by definition should produce dividends or rent. “It’s these future income streams that offer some long-term value predictability of the asset. Collectible items will not fluctuate on value but by supply, demand and popular opinion, something we have no control over,” he said.
The fractionalisation process itself, however, could make these assets more predictable. Normally, values rely on a niche community but IPOs broaden the audience. Secondary markets bring liquidity and allow investors to track values in real time. The platforms offer the expertise in selecting what to buy.
Masterworks, which trades art, launched its first painting in 2019 and has 180,000 users, a number that is growing by 15,000 a month. It retains the right to decide when a work is sold. Last year it sold Banksy’s Mona Lisa at a 32pc return for shareholders.
Another firm, Rares, was launched in May and trades trainers. In April it bought the Nike Air Yeezys worn by musician Kanye West to the Grammys for a record- breaking $ 1.8m. It will offer shares in the shoes this year.
Gerome Sapp of Rares said: “We grew up in the hood and this is our culture. We feel this is the future of valuing. It allows the people to say what the price should be.”
Aquicent is another American startup that plans to launch a range of “stake tokens” in real-life collectible items by the end of the year. Anthony Citrano, its founder, said: “Our dream is to be able to offer baskets of tokens, similar to funds.”