Published: August 21, 2018
Borro Private Finance is a relatively new player in the luxury asset market, but instead of buying and selling, they provide loans secured against such assets, tapping into a large network of appraisers and auctioneers and providing non-bank financing options for immediate access to capital. With a few different options for clients, Borro Private Finance has funded more than $400 million since 2008. As the company marks its 10th anniversary, Antiques and The Arts Weekly caught up with Claire Hillier, Borro Private Finance’s chief commercial officer, for additional insights into Borro Private Finance’s success.
In a nutshell, how does the process work? What are the differences and benefits of each of them?
We offer three types of loans. In a “sale advance loan,” Borro Private Finance advances a client money and manages the sale of their asset through a global network of auction houses. This is ideal for clients who have made up their mind to sell, who do not have an emotional attachment to the value of an item, and who are willing to wait for the best and most appropriate auction. With a “bridge loan,” the client uses their asset as collateral without having to sell the asset. The asset is returned to the client at the end of a loan period once the client has paid the loan amount and accrued interest. That option is great for clients who need money quickly and can repay Borro Private Finance within six months. A “term loan” is like a bridge loan but differs in that the length of the loan is longer.
Are there minimum / maximums for these loans? Is there a typical loan amount?
In general, we do not loan against very many items valued below $50,000. At the moment, we will loan as much as $30 million against an item. Our average loan is currently $150,000 but we are on track for that to rise to $500,000. We find that our sweet spot is for items valued between $500,000 and $5 million.
Is Borro Private Finance unique in the industry? What sets Borro Private Finance apart?
Borro Private Finance is not completely unique, but we were the first game in the industry, the first to leverage high-end assets. We occupy a space with fewer competitors, and because we lend against a relatively broad spectrum of assets, not just art, we can represent a higher volume of assets. We use our extensive network of contacts of appraisers and experts to identify the best venue for a specific item, even if that means a collection is sold across multiple venues. Clients come to Borro Private Finance because they want our expertise to guide them.
What is the advantage of working with Borro Private Finance over, say, a fine art dealer or other agent to negotiate the sale?
Borro Private Finance provides a very independent, unconflicted role in the market. We do not make money selling assets, we are only interested in making money through lending.
When looking for an auction house to consider selling an asset, what factors do you consider? Which auction houses does Borro Private Finance work with? Do you ever work with a private gallery?
Borro Private Finance looks at the track record of an auction house with that asset. We gauge their excitement in an item, the strategy they propose for selling it, if there is anything comparable in the sale. Another influencing factor is the timing of the sale and how that fits into our client’s needs. Borro Private Finance has a great track record and strong relationships with all of the houses: Christie’s, Sotheby’s, Bonhams, Phillips, Heritage. Approximately 95 percent of the items we sell go through auction, though there are some instances where we will work with a gallery.
Borro Private Finance will work with auction houses that do private sales, but in general, we do not partner with houses to secure guarantees.
Auction estimates are not guarantees of sale results. What if an item goes to sale at auction but the sale result falls short of the estimate? What if the sale result exceeds expectations?
In the case of the former, Borro Private Finance assumes that risk and the client would not be obligated to pay the difference. In the case of the latter, the client would benefit from any upside achieved at sale after repaying the loan amount, which frequently happens.
What are some of the more unusual or unique items Borro Private Finance has loaned against?
Borro Private Finance has lent against an Olympic gold medal, an Oscar, a Super Bowl ring, some costumes and some sports memorabilia.
Is Borro Private Finance looking to expand into other asset categories in the near future? Conversely, are there asset categories Borro Private Finance is likely to stop loaning against?
Borro Private Finance is not likely to expand our asset categories. Right now, musical instruments and items with restricted materials, such as ivory or rosewood, can be very challenging. Borro Private Finance has to be sensitive of downward trends that might cause many items in a specific asset class – such as furniture or other decorative arts – to become limited in terms of what we would loan against.
Borro Private Finance is celebrating a ten-year anniversary this year – what do the next ten years look like?
We are in the middle of a rebrand. We are planning to expand our presence in Los Angeles, to join our existing offices in London and New York City. Other areas we might expand into include Miami, Dallas, possibly Denver. There is less focus on expanding on the Continent because there is so much opportunity for growth in the United States.
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