Christie's Drops Plans for Art Investment Fund and Lending Division

Lindsay Pollack of Bloomberg is reporting that Christie's has canceled plans to open an art investment fund and an art loan division. The article indicates the decision is based upon the current state of the economy as well as the art market still not having shown enough signs of growth over the past months. This runs contrary to some recent reports that the art market has bottomed out, with some signs of recovery. It shows there is still a ways to go, and the overall sluggishness of the economy, high unemployment figures and general lack of confidence in a recovery is not helping.

Pollack reports Christie’s was exploring ways to create a separate financial division, instead of offering loans and other services as part of the larger auction company.

The closely held company wanted to compete more directly with Sotheby’s Financial Services, a subsidiary of Christie’s main auction-house rival. The financial division of Sotheby’s, a publicly traded company based in New York, generated $6 million in revenue during the first half of 2009.

HSBC Holdings PLC and Goldman Sachs Group Inc. were both approached about the ventures, but talks fell apart, according to a person familiar with the plan. Spokeswomen Juanita Gutierrez of HSBC and Andrea Raphael of Goldman Sachs declined to comment.

Fired Executives

Christie’s interviewed investment managers and bankers to gauge interest in an art-investment fund and took steps to establish a separate asset-management company aimed at raising $250 million to $350 million.

As the world economy continued to falter, Christie’s scrapped its plan and fired several executives in New York and London who were going to run the operation, according to the two employees involved in the project.

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