Stephan Ludwig, the CEO of Forum who started his business career as an investment banker, believes the product has the potential to extend liquidity to a far wider client base of collectors and dealers than ever before.
While many auctioneers make similar private arrangements for specific high net worth clients, it is thought to be the first time it has been offered at ‘point of sale’ to all bidders. “It establishes a new frontier in this market,” he says.
First Folio Purchase
The auctioneers have already used the new relationship with Unbolted to help a collector acquire an £850,000 Shakespeare First Folio. The bespoke private treaty deal involved the collector consigning items for sale at auction while raising the capital to purchase an icon of English literature.
Unbolted specialise in short-term loans secured on luxury assets and look primarily to the asset rather than the borrower to determine the lending criteria. Applicants are asked only typical ‘know your client’ information and will not need to make a full credit disclosure.
Buyers approved to use the facility (available through designated links on the Forum website) will be offered up to 70% of the hammer price of a purchase and charged a monthly interest rate of 1.5% on any balance after the initial three months. Forum will act as a vaulted security agent for the lender and will store purchased items free of charge until the loan is repaid. In the event the client defaults, the items will be re-offered for sale.
Ludwig says he has been exploring how the auction market can engage with the peer-to-peer lending market for some time.
“For the collector or dealer, it means immediate access to the target purchase at short notice. For Unbolted, sub-contracting the valuation and storage of the merchandise to us means they can offer competitive rates. And as an auction house it benefits both our liquidity and sales volume.”
An example of a Forum-Unbolted loan deal for an auction purchase
Hammer price: £10,000
Total invoice inc. premium and VAT: £13,000
Amount of credit from Unbolted: £7000
Cash payment by buyer: £6000
Agreed loan term: 6 months
Interest rate for first 3 months: 0%
Amount repayable if paid within 3 months: £7000
Monthly interest rate after 3 months: 1.5%
Total interest over loan period: £315
Total repayable in one instalment: £7315
Representative APR: 9.2%
