MARKET WATCH ART FUNDS
It was two years ago that Kristina McLean, a Canadian-born financial analyst in her early 20s, left Morgan Stanley in order to enter the art world. Her research has indicated that there are some fifty funds worldwide, all of which buy and sell artworks and a few of which short Sotheby’s – Christie’s not being publicly held – or what they perceive as art-related stocks as a kind of hedge.McLean’s thinking is quite different. The Art Bridge Finance Group won’t be cutting out dealers by buying art and squirreling it away. The fund will be investing in cutting-edge mostly young galleries. “What I am doing is I’m giving them a bridge loan,” she told me some months ago. “The loan is to enable the gallery to buy art from their artists and to fund their projects. It used to be that you would find an underknown artist, usually young, buy in and wait for them to rocket to the skies. You can’t wait. You have to actively do something. That’s what I think. A good way of doing that is aligning yourself with the right gallery.”
What McLean is trying here is more radical than it may at first sound. It’s a counter-attack against the blue chip, often multi-national mega-gallerists that have been vastly increasing their power in the art world and which tend to use the smaller galleries as so many fish farms, pools from which they can snatch attractive prospects at their leisure.
“The smaller galleries are pushing the artist into that first group show … maybe a first solo show … maybe a tiny museum show somewhere. And then suddenly they get poached by these bigger galleries,” McLean says. “So instead of helping galleries where I could just give them cash, if I help the younger galleries I can add a lot more value than just money. In the early stage it’s developing goodwill with the gallery. And working on smaller projects in order to establish relationships. Which might only become fruitful for me, investment-wise, in a couple of years. I’m going to leave the expertise in the hands of people who really know what they are doing. And the people who are adding value. And that, ultimately, is the gallery. And I think that, coming from a finance perspective, where everything is about adding value, and activist investing, and things like that, I think that I can add most value to younger emerging galleries.”
This value will include access to the collectors and institutions that McLean has cultivated. And she plans to target them precisely. “I’ll do extensive research to develop a sense of who the client base is. Are they willing to pay what the work will end up costing? ”
This is not, of course, a cultural equivalent of pro bono. If the Art Bridge Finance Group puts up the capital for an entire project, they will expect half the profits, if any. Otherwise, she will work things out on a case by case basis.