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The Fine Art Group buys Falcon Fine Art as art finance industry consolidates

Terms and cost of the Falcon buy have not been revealed but deal includes the "purchase of over 10 loans” with borrowers in the EU, Australia and the US

Freya Stewart, the chief executive of art lending for The Fine Art Group The Fine Art Group

Falcon Fine Art, an art-secured lending division of the specialist financier Falcon Group, has been bought by The Fine Art Group. No figures have been communicated for the acquisition.

Falcon Fine Art was launched in 2014 by Kamel Alzarka, as a division of his Falcon Group which provides alternative financing for business. The group has offices in 10 cities including Perth, London, Jakarta, Singapore and Auckland, New Zealand, and in a recent interview its business development manager Steve Box said it had “deployed over $8 billion in the last three years”. At the time of the launch of Falcon Fine Art, Alzarka said that they had allocated about $200m to it, with the intention of building a $500m loan portfolio by 2019.

Asked what the size of the loan book is now, The Fine Art Group says that it could not disclose this “owing to the strict confidential legal obligations of the acquisition deal”, but that the deal involved the “purchase of over 10 loans” with “borrowers in the EU stretching as far as Australia, with collateral in a major American institution.”

Nevertheless, it seems probable that the portfolio fell short of expectations. It is also a sign of consolidation in the art finance industry, which has seen a sharp increase in the number of entrants in the last few years. The bulk of this business—worth between $16bn and $20bn in 2017 according to a Deloitte and ArtTactic report—is in the US, where Falcon does not operate, although The Fine Art Group says that it had “a number of loans with US collectors and New York dealers.”

In a press release announcing the acquisition, The Fine Art Group’s Freya Stewart, the chief executive of the art lending business, says: “This inaugural art-financing business consolidation strengthens our longterm commitment to being the leading art finance provider to collectors and owners of high value art globally. This is an exciting time for our business as demand for our art financing product increases.” Stewart will be leading the business, meaning that Falcon Fine Art’s director Dr Tim Hunter will be leaving the company.

Another art financing firm, Athena Art Finance, a boutique lender founded in 2015 with $280m of capital from the Carlyle Group, is also reportedly looking for a buyer: a spokesman tells The Art Newspaper that there is no further update on this.