5 Key Insights into Art-Backed Lending

Overstone’s CEO Harco van den Oever sat down with Senasen Group’s CEO & Founder Blair McPherson earlier this year to discuss art-backed lending.

Here are 5 insights you can take away:

-   Art financing market size: There is USD$1.74tr art in private hands, with 2% being currently leveraged. Of that in private hands, we estimate 75% to be in warehouses, and therefore dead assets. 

-   Main drivers of this market: low interest rate environment, increased movement into private banking from big global banks, increased availability of data 

-   Key information: The market has been very focused on value and indices. More importantly, transactions are actually driven by liquidity, authenticity risk and condition risk. If you can measure liquidity, you can mathematically apply that to your Loan-to-Value.

-   Key challenges for art financing: regional differences and legislation, perception of art market as illiquid and lacking transparency

-   Key benefits of understanding art better: understanding art as part of an overall asset pool, creating portfolios on a risk return basis amongst other asset classes

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