Read all about it: Rare book dealer plans float to buy fine collections
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RARE books are coveted items and wealthy collectors spend about £200million a year acquiring them in the UK. Demand is growing, London is at the centre of the market and most of the trade is done by independent specialist dealers.
Now, one of the leaders in the sector, Scholium, is floating on the Stock Exchange. The shares are priced at 100p and should rise in value considerably as the company grows.
Scholium is the brainchild of Philip Blackwell, a director of Blackwell Publishing until it was sold to Americans for £572million in 2007. Flush with cash, Blackwell bought Shapero Rare Books, based in Mayfair, and renowned throughout the book world.
The business, founded by Edward Shapero, owns about 6,000 books, varying in price from £50 to more than £200,000. On average, these rare books cost about £6,000. Sometimes, however, they cost considerably more, such as the fourth ever printed Bible, which Shapero sold for almost £1 million in 2011.
Many books are sold as collections by aristocrats who have had them in the family for generations, but no longer want them.
Before the financial crisis, book dealers would finance these purchases through bank loans. These days, banks are reluctant to lend so independent dealers have to be resourceful.
Two years ago, for example, a collection of 300 old religious works and 60 manuscripts came on the market. The price was €9.5million (£7.8 million) and the seller was a Dutch businessman, Joost Ritman, whose family had made a fortune selling plastic plates and cutlery to airlines. A passionate collector, Ritman had overstretched himself and needed money fast.
Shapero, who is on the Scholium board, was determined to buy the mini-library, but bank finance was elusive so he sought help from business contacts, ultimately finding funds from a Ukrainian oligarch. The sale was completed and the process made Blackwell think that if he could raise funds on the stock market, he would be better able to finance exceptional deals when they arise and he could help other independents do the same.
Under this week’s flotation, Scholium is hoping to raise £10million. Some of the proceeds will be used to boost stock at Shapero Rare Books and some will be held in reserve to be used when particularly fine collections come on the market.
Scholium will not restrict itself to books but may also help dealers it knows well to finance purchases of rare collectibles, such as silverware, sculpture and even old arms and armour.
The firm has two other businesses as well – a high-end art bookshop in South Kensington, London, and Ultimate Libraries, which provides tailored libraries for luxury hotels and individuals who want to own a collection of books but prefer to ask an expert to pick the right material on their behalf.
South Kensington Books is highly regarded in the art world and Ultimate Libraries is growing fast, so the flotation proceeds will be used to develop both divisions. The collectibles market is changing as global economic conditions evolve. Many buyers these days are from China, Russia, Brazil and India, often buying works that were published in their home countries.
Demand is growing and London is particularly well placed to benefit because many of the richest business people buy homes in the UK.
Analysts forecast Scholium sales of about £6million for the year to March 31, rising to £10million next year. Pre-tax profits are expected to more than double from £550,000 to £1.2million in the same period. A dividend should be paid from 2015 and the shares will be eligible for Enterprise Investment Schemes.
Midas verdict: The rare books market is little known outside rarefied circles, but collectors tend to be passionate about their hobby and willing to pay extremely high prices to secure what they want. Blackwell and Shapero are well-connected and the flotation proceeds should enable Scholium to grow fast. At 100p, the shares offer good value. Buy.