ARTEX
After its successful inaugural trading session in March, ARTEX’s CEO Yassir Benjelloun-Touimi talks to Jack McRae about seeking to create a new asset class and democratise art
Leonardo da Vinci’s ‘Salvator Mundi’ was sold for just over US$450 million in 2017, making it the most expensive painting in history. The 500-year-old artwork was purchased by Badr bin Abdullah, a Saudi Arabian prince, on behalf of the Abu Dhabi Emirate, with the intention of being displayed in the Louvre Abu Dhabi. However, the exhibition at the gallery was postponed indefinitely and, after a dispute with the Louvre in Paris, the painting found home on ‘Serene’ — Saudi Arabian Crown Prince Mohammed bin Salman’s yacht.
It now sits in storage, awaiting a museum worthy of its housing to be built.
“At the moment, only few people can benefit from owning art and nobody can see the art,” Yassir Benjelloun-Touimi explains. “This is condemning those great artworks to sitting in prison.”
Benjelloun-Touimi is the CEO and cofounder of ARTEX, a stock exchange dedicated to transforming art into an asset class — for which, the motivation can be explained by a series of simple questions.
Benjelloun-Touimi posits: “Why should only wealthy people benefit from having the artwork in their living room? How do we solve that conundrum? How do we spread the appreciation of the best art that has been produced and allow them to be a part of it?”
The answers to that last question came six years ago. “In 2018, all asset classes were so expensive,” Benjelloun-Touimi explains. “We had asset managers wondering where to invest capital and art sounded so natural for us, but it is only available for rich people.”
The genesis of ARTEX may have began in 2018 with a meeting between Benjelloun-Touimi and his business partner, Prince Wenzeslaus of Liechtenstein, that aimed to tackle a financial issue, but its true foundations lie deeper.
Opposite ends of the spectrum
“I started loving art very early in my life. I was eight-years-old when I watched a documentary on de Vinci and my mind was opened,” Benjelloun-Touimi reflects on his life that has taken him on a cultural journey from growing up in Morocco to studying in Paris to working in London.
His career in the financial industry that introduced him to Prince Wenzeslaus. “We were two people who came together from completely different backgrounds but we bounced ideas off each other about what we wanted to achieve,” he says.
Despite their contrasting backgrounds, the two men found friendship through art. Benjelloun-Touimi describes how, “for him [Prince Wenzeslaus], art is natural. His family have been collecting art for 600 years or 700 years, they have museums. For him art is not a choice, for me it was.
“I come from one extreme end of the spectrum and he comes from the other end but we share a love of art and the fact that we became partners in finance.”
Their shared passions birthed ARTEX. The men believed that art should not only be available to be viewed by everyone, but it should also be able to be owned by everyone.
This idea is not necessarily a new phenomenon and Benjelloun-Touimi admits to having been inspired from previous attempts to invest in art. He says: “We looked at what’s happened in the past and the first attempt to invest in art was in England through the British Rail [Pension] Fund in 1974. 50 years later and we used the same model.”
However, the ability to invest in art was, as it had always been, impossible for anyone outside of the wealthiest people. “The cost of engagement was still high, you needed to put in £50,000 or £100,000 in,” Benjelloun-Touimi explains. “So we looked at other ways to increase the engagement and still enable art to be safe as an investment.”
The method became clear: “The best way to ensure that investors are safe and have the choice to buy and sell whenever they want, as well as reach them anywhere on the planet, is to have a stock exchange.
“This is a new asset class and we want to establish it as a viable asset class that becomes mainstream down the line. Our biggest challenge is convincing banks to allow their clients everywhere to buy and sell shares to them. That’s not easy and it’s a process that takes a long time.”
A new asset class
ARTEX allows for investors to buy and sell stocks in artwork, and operates just as any other stock exchange does, Benjelloun-Touimi states.
He says: “We give an investor the same process as they would find on the London Stock Exchange or NASDAQ. We have the same security, the same level of regulation and the prices you receive need to be sent to Bloomberg too.”
Protecting the investor is paramount for ARTEX and its co-founders, who see their platform as key to unlocking art as a new asset class. “A stock exchange is a place where only banks and regulated financial institutions can be members and they bring the clients to invest,” Benjelloun-Touimi emphasises. “There are double layers of protection with a stock exchange.”
He believes that creating that new asset class is possible, but “we have to have an industrial transformation. Artwork can become a number of securities which are transferable, liquid, and regulated.”
The creation of this new asset class appears simple, and important, to Benjelloun-Touimi. “Art from the most important artists in our history has not only beaten inflation but has also beaten the classical asset classes like bonds and equity in many instances. This is the same regardless of if there are periods of high stress and volatility as well,” he explains. “Art, in the long run, gives you a high probability of making money. It gives you diversification and ultimately is a good investment.”
One aspect of this transformation can be made through building trust with banks, as well as investors, that ARTEX can revolutionise the alternative asset space. One measure they have taken to help establish this trust is by partnering with SIX.
Benjelloun-Touimi explains the partnership: “In order to give confidence to the market that the trades will be settled, we have an agreement and partnership with SIX to manage clearing and then the settlement goes through Euroclear and ClearStream.
“We chose a company that is innovative, that is big enough and that is recognised. We felt it was important to have a partner of a high quality to reassure investors.”
The partnership also excites Jose Manuel Ortiz, head of clearing and repo operations at SIX, who comments: “Our partnership with ARTEX is driven by a shared vision for innovation. For SIX, innovations in emerging asset classes and new trading venues means stability and enhanced liquidity.
“This collaboration with ARTEX allows us to play a key role in creating a more secure, efficient, and accessible art investment landscape. Effective clearing is crucial for building liquidity and mitigating risk in the development of this new marketplace, and our established expertise in clearing ensures the stability required for this new market to live up to its potential.”
Breaking barriers
Benjelloun-Touimi is looking to transform the market. “If you look at the numbers, art collections are worth US$3.5 trillion around the planet. One-third of that is in museums, two-thirds are in private hands. This is a massive market, it is the equivalent of a private equity market. The number of players is just very, very few.”
He continues: “Unless you’re a billionaire, you cannot spend US$50 million on art. And how many billionaires are there on the planet? There are 3000. How many of them are passionate about art? Probably 500. The numbers are very, very small.
“A lot of people who are collectors — and their net worth is above US$50 million — invest 24 per cent of their wealth in art. That is a reason why art has been performing for 500 years. That is the reason why paintings by Leonardo DaVinci are worth more than US$100 million and very few people can buy them. The same goes for works by van Gogh or Picasso.”
So how can those numbers be widened?
“We use natural traditional processes to sell shares and we started with the lowest amount possible so it’s less than €100 to buy your share,” Benjelloun-Touimi explains. The root of transforming art into an easily accessible asset class, with shares that can be bought and sold, is underpinned by ARTEX’s mission.
Benjelloun-Touimi believes art has been held for too long in the hands of the very few and, as such, has impinged on society’s love for art.
“It’s not easy for anyone to walk into a gallery in Mayfair and look at artwork worth £2 million, even if they like art, because they may feel it is inaccessible. We want to break those barriers,” he stresses. “We want to democratise the investment opportunity and, in doing so, we are democratising art because more people will learn more about it.”
ARTEX’s mission means that they made the decision to lend all artwork placed on their stock exchange freely to museums. There should be no blockade to art.
Benjelloun-Touimi bemoans: “The cost of art has gone so far that museums cannot afford to buy artworks anymore and we want to bring art back to these cultural institutions. This is how the conservation of our cultural heritage is done.”
Benjelloun-Touim laughs off the suggestion that he, and ARTEX more generally, might consider themselves as a Robin Hood-esque figure. He is honest as he says: “We are not [Robin Hood] and we don’t pretend to be, but we can do good and have a positive social impact.”
He argues that their mission of democratising art relies on ARTEX being able to financially support itself first. He explains: “We support cultural institutions, we invest in education and we try to get art into very underprivileged places. However, we are anchored in the financial world with a stock exchange that makes money. In order for us to fulfil our mission, we do need to be independent financially and, also as entrepreneurs, make money. We want people to make money and create an asset class, but we want that money to feed into helping and supporting cultural institutions.”
Transforming art into an asset class and giving more and more people the ability to invest in artworks will take time. Even by Benjelloun-Touim’s own admission, “Rome was not built in a day. It takes time and it takes commitment. Ultimately, what makes us push every day is the fact that people young and old, from different countries want to participate”.
ARTEX may be six years into its journey, but there are still a number of important strides to be made in order to establish art as a mainstream asset class.
Benjelloun-Touim is undeterred by the challenges ahead. “It took us four years to do our first IPO but now we have a clear roadmap to start and increase the issuance,” he explains.
Yet, through it all, there is one underlying factor that is shaping ARTEX — one which would not sentence a piece of artwork to years in confinement in various storage facilities.
Benjelloun-Touim, with his ever-unwavering passion, says: “The most important step has been the passion for art and the recognition of its importance in defining who we are and the way we connect to our history. Art allows us to connect with each other.”
