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Fractional art market opens up to lure new investors

K-Auction subsidiary submits regulatory filing for fractional investment in Yayoi Kusama's W1b painting

Dec. 4, 2023 - 15:59 By Im Eun-byel
Yayoi Kusama’s iconic “Pumpkin” artwork was displayed at an exhibition in Seoul in July last year. Two fractional art investment companies, Art Together and Yeolmae Company, have recently submitted a registration statement for the artist's pumpkin motif paintings. (Newsis)

Art Together, a subsidiary under major Korean art auctioneer K-Auction, announced Monday it has submitted its registration statement for fractional investments in Yayoi Kusama's 2002 artwork, “Pumpkin,” to the country’s top regulator, the Financial Supervisory Service.

Art Together purchased the painting from renowned British auction house Christie’s for 1.09 billion won ($835,000) and has set the subscription price at 1.18 billion won, allowing retail investors to subscribe to buy 11,820 shares at 100,000 won per share.

By subscribing to the shares, retail investors can hold fractional ownership in the artwork, and later turn a profit when the entire work is sold or by selling their share. Fractional investment assets are not limited to fine art but could also be expanded to real estate properties, music copyrights and even cattle that are sold at auction for beef.

Art Together analyzed 359 transactions of similar works by the artist from January 2013 to October 2023, and also received appraisals from external agencies to justify its subscription price, according to the company.

If approved by the FSS, local brokerage house NH Investment & Securities will receive subscriptions from investors who have real-name accounts at the firm from Dec. 26 to Jan. 2.

This is the second time Art Together has submitted a registration statement for fractional art investment to the FSS.

Shortly after submitting the registration for Stanley Whitney’s painting “Stay Song 61” in August, it withdrew the registration, responding to concerns about unfair price appraisal, considering it had purchased the artwork from its parent company, K-Auction.

“The previous withdrawal was a voluntary one for fair value suggestion and investor protection,” analyst Choi Jae-ho at Hana Financial Investment said. “It is likely that the newly submitted registration will earn the financial authorities’ approval, having continuously reflected their feedback.”

With companies such as Art Together lining up for registrations, Korea’s fractional investment market has been gaining traction in recent months. In August, the FSS allowed five companies -- Stockeeper, Tessa, Yeolmae Company, Seoul Auction Blue and Art Together -- to submit registration statements for fractional investment, after exempting them from tight regulations.

On Nov. 28, Seoul Auction Blue, operator of the fractional art investment app Sotwo, also submitted to the FSS its registration for the artwork “Dollar Sign” by Andy Warhol.

Affiliated with Seoul Auction, another big-name art auction house here, the company procured the artwork for 626 million won from its parent company.

Like Art Together’s Kusama piece, the subscription price has been set at 100,000 won. It plans to allow retail investors to subscribe to 7,000 shares worth a total of 700 million won. If the FSS approves the registration, the public subscription process will kick off in late December.

Yeolmae Company, the operator of the app ArtnGuide, has also submitted its registration for another piece by Kusama also titled “Pumpkin” (2001). It plans to attract 1.23 billion won of investments in the piece, which depicts the artist’s most well-known pumpkin motif, but is of a different size than the work owned by Art Together.

In addition, fine art fractional investment platform Tessa is to submit its registration to the FSS by the end of December, while Stockeeper, the operator of Bancow, a platform for investing in cattle to be auctioned for beef, is also gearing up to start its registration procedures.

“Though the FSS has not approved any company yet, the first subscription is likely to happen in December, considering the current process," analyst Yoon Yu-dong at NH Investment & Securities said. "K-Auction and Seoul Auction shares are growing in value, reflecting market expectations for fractional investment.”