Today, it’s possible for families to both use their art as a source of liquidity and to put it on display themselves or lend it out to a museum or other exhibitor.
How does one apply the quantitative power of computing and automation to the softer, more subjective world of art?
“We do it the same way one would analyze real estate, equities and debts,” said van den Oever. “Look at the liquidity, the volatility, the likelihood of a change in authenticity, and condition risks.”
The firm keeps a database of 10,000 assets and tracks how actively traded they are in the art market, with 2.5 million art transactions recorded in its database, offering a sense of the overall liquidity, volatility and valuation of works of art. Currently, the Overstone platform focuses on “flat art” and sculpture, but in the future it may be expanded to include other types of collectible real assets like classic cars and wine.
Van den Oever has leaned on experience in the banking and brokerage industries as well as a 12-year stint at Christie's working in various roles to develop Overstone. At Christie's, he recognized a “vast disconnect between the art market and the financial services industry.”
Few firms were able to successfully link art, which for many families is a significant asset, to finance, but at Christie's van den Oever worked with family offices to help wealthy clients use art as collateral.
“We realized that there weren’t many offers in the market in terms of lenders, and at the same time, we were being taught by one of the biggest global private banks to write their global policies (regarding lending using art as collateral), “ he said. “After our policies were signed off by the executive committee, it got stuck in their risk department – so we ended up developing alongside the risk department a number of algorithms and tools that are able to measure and understand the riskiness of works of art.”