Collectors are being offered a stake in the world’s rarest stamp next month – in a ‘fractional ownership’ deal of the kind that could transform the alternative investment market.
Stamp dealership Stanley Gibbons paid $8.3million (£6.1million) for the British Guiana One-Cent Magenta in June. But it is expected to value it at £8million in a sale next month when shares in the stamp will be sold for a predicted price of £100 or so.
There could be as many as 80,000 shares available for sale. The company could potentially bag an instant profit approaching £2million if all the shares are sold. Stanley Gibbons will purchase any shares not purchased.
‘Mona Lisa of Stamps: Thousands of buyers are offered a share of the One-Cent Magenta
The stamp dealer is among a growing number companies entering fractional ownership. Other companies include The Car Crowd, an online car trader, and Koia, a website dedicated to fractional ownership.
Graham Shircore, chief executive of Stanley Gibbons, says: ‘This offer should not be viewed as just an investment, but an opportunity for enthusiasts to get involved in a market that they love – to partly own one of the rarest stamps in history – the holy grail of philately.’
Because the offer is not intended to be an investment, the Financial Conduct Authority will not regulate it. Stanley Gibbons hopes that investors will be attracted by the recent record of stamps increasing in value.
According to Knight Frank Luxury Investment Index, the world’s top collectable stamps have seen an average value increase of 64% over the past decade.
Fans have dubbed the British Guiana One-Cent Magenta “Mona Lisa” in the stamp world. It is the only survivor from a small set that was produced in the former British colony of 1856.
It is worth noting that the $8.3million this summer price is lower than the $9.5million paid by the previous owner in 2014. This shows how stamp values can fall.
Shircore said: “Unlike buying a stamp directly, you can’t come to and physically hold this fractional capital investment, but you do get legal ownership and economic ownership.”
He says a major part of the stamp’s appeal will be that partowners will be given a ‘digital’ representation of ownership – an image of the One-Cent Magenta that can be downloaded on a smartphone or computer.
There will also be an option to put a ‘digital signature’ on the back of the stamp image. Buyers should be wary that although they will be able to buy a fraction of the stamp – individual ownership is limited to no more than 10 per cent of its total value – it could prove hard to trade.
Stanley Gibbons has set up a trading site where collectors can sell and buy their fractions. It will take a cut of any trades – perhaps as much as 10 per cent – although website dealing might not be possible until spring next year. It is not suitable for people looking to make quick profits.
Phoenix Asset Management purchased Stanley Gibbons three years ago. They also own model railway company Hornby, and website Showpiece. Shircore, of Stanley Gibbons, is a co-founder of Showpiece and will be using its technology to promote the stamp’s sale. He says: ‘If it is a success, we might look at fractioning other collectables – in areas such as music and sport.’
The Car Crowd, a classic vehicle investment platform, already uses fractional ownership. Earlier this year, it enabled investors to purchase an investment in two classic cars – an £18,900 Peugeot 205 GTI and a £30,000 Renault Clio V6.
64 investors were interested in the Peugeot, while 69 bought the Renault. The Car Crowd is looking for investors to purchase more vehicles – a £220,000 Spyker C8, a £77,000 Ferrari 360 Modena and a £59,000 Ford Sierra Cosworth.
Kirsty Spickett, its marketing director, says: ‘Classic cars have generated some fantastic returns for investors in recent years – though they remain unaffordable for many enthusiasts.
‘Although you cannot drive the vehicles, you will have a real stake in the car and get a say when it is sold. Only 15% of investors are required to vote on the decision to sell. However, it is expected that every classic will be held for at least five.
It is still too early for investors to learn if they are going to make money out of the classic car investment – or any other fractional ownership deals now springing up.
Up close: Stamp dealership Stanley Gibbons paid $8.3million (£6.1million) for the British Guiana One-Cent Magenta
Knight Frank estimates that the most sought-after classic cars have earned an average return of 193 percent over the past ten consecutive years.
However, unlike the modest offerings by
The Car Crowd, the index includes ultra-expensive rarities such as a 1957 Ferrari 335S Scaglietti Spider that sold for £26million in 2016. The Car Crowd charges a 10% commission on all purchases. This includes storage and maintenance fees. It is not like Stanley Gibbons’ fractional ownership agreement and is marketed to investors as an investment.
Investments start from £30 and, as with the One-Cent Magenta stamp, no investor can purchase more than 10 per cent of the vehicle’s initial price. There is a ‘virtual reality garage’ where buyers can look at their car online – a poor substitute to taking it for a spin.
Website Koia will also be offering fractional ownership. This website will use a mobile app to sell shares of fine wine, rare whisky, and expensive watches. It will begin the offer with a magnum of 2002 Boerl & Kroff champagne it has valued at £3,720. You can pay as much as £4,200 for a magnum through a wine merchant.
Richard Draper, cofounder of Koia says that the company is still in its pre-launch phase and doesn’t know how interested people are in buying fractions. But there will be a minimum investment of 50 euros (£42) and a single upfront charge equivalent to up to 2 per cent of the amount invested. This will cover storage and management costs, but there will not be an annual charge.
Koia hopes to follow with a fractional ownership offer for a £10,300 Rolex Submariner watch – and move into whisky and other fine wines and watches.
The Financial Conduct Authority will not monitor Koia’s fractional ownership company. Instead, it plans to operate according to European crowdfunding service providers’ regulations – and is marketing itself as a European offer, welcoming UK investors.
Potential buyers should be aware that any secondary market – where investors can trade their fractions – will not be available for ‘six to 12 months’.