Important Disclosure. The structure outlined below is presented for informational purposes only. It is not an offer or solicitation to buy or sell any security. Terms remain subject to regulatory review and counterparty documentation.
FG Capital Art Liquidity Bridge
Quick take: We built a three-layer system that lets investors exit on any business day without forcing a fire sale of canvases. A dedicated market-making desk posts daily bids, a cash sleeve absorbs routine flows, and a listed wrapper gives brokers a clean handle. Legal and audit teams are finalising docs; counterparties are in credit review.
1. What It Is
The Art Liquidity Bridge is a closed-end art vehicle paired with a standing liquidity facility. Investors hold units in the core fund. Daily exit is delivered through a parallel trading line run by a contracted market maker and, where scale warrants it, an exchange-traded note that mirrors the fund’s NAV. The core assets stay long-term; liquidity is provided at the wrapper level.
2. How It Works — Step by Step
2.1 Core Fund (Illiquid Sleeve)
- Holds the art: blue-chip and mid-market works sourced via galleries, auctions and private dealers.
- NAV struck monthly (with interim shadow marks). Independent appraisers form the pricing panel.
- Lock-up on the sleeve: no forced disposals to meet day-to-day flows.
2.2 Liquidity Sleeve (10–20% Cash & T-Bills)
- Cash and short paper sized to routine redemptions.
- Refilled from periodic disposals, leasing income, or MM buybacks.
2.3 Market-Making Facility
- Counterparty agrees to quote a daily bid/offer around shadow NAV.
- Spread bands widen in stress scenarios per a pre-set grid.
- Facility backed by a capital line and collateral pledge from the fund.
2.4 Listed Wrapper (ETN or Similar Note)
- Issued by a bank once AUM crosses a trigger level.
- Tracks monthly NAV. Trades on an exchange; investors can sell on any trading day.
- Note proceeds flow into the fund; redemptions are handled at the note level, not the art sleeve.
2.5 Optional Tokenised Side-Car
- Regulated digital units for smaller tickets.
- Secondary trading on a whitelisted MTF or DEX pool with KYC gates.
3. Governance & Valuation
- Valuation policy: quarterly full appraisals, monthly shadow marks using auction comps and index data.
- Appraiser panel: minimum of two external firms per cycle; tie-break protocol in place.
- Audit trail: provenance checks, authenticity reports, insured custody with climate control.
Every liquidity quote references this policy. The MM cannot arbitrarily set price outside the agreed bandwidth without a trigger event.
4. Liquidity Waterfall
| Order | Source | Capacity | Cost to Investor | Trigger |
|---|---|---|---|---|
| 1 | Cash/T-bill sleeve | 10–20% of NAV | None | Daily flows inside cap |
| 2 | Market maker bid | As per facility limit | Bid/ask spread | Requests beyond sleeve |
| 3 | Listed note secondary | Exchange depth | Market price vs NAV | Broker-driven exits |
| 4 | Extraordinary disposal | Ad hoc | Discount + costs | Board-approved only |
5. Economics
- Management fee: standard alt-asset range (to be set in final docs).
- Performance carry: over a hard hurdle, crystallised on realised gains.
- MM fee: standby fee plus spread economics.
- Note costs: issuance fee baked into the ETN pricing; annual maintenance charged by the issuer.
- Ongoing costs: insurance, storage, transport, appraisal, legal.
6. Status & Next Milestones
- Legal architecture drafted for Delaware interval fund and Luxembourg RAIF variants.
- Term sheet with the lead market maker in second-round credit review.
- Valuation policy and appraiser panel shortlist circulated to auditors.
- ETN issuer engaged; listing venue narrowed to SIX and Euronext Growth.
Once the MM agreement is signed and the auditor signs off on the valuation handbook, we move to final offering docs and soft-circle anchor tickets.
7. Why It Matters to Allocators
- Daily or near-daily exit without breaking the core thesis of long-hold art appreciation.
- Clear pricing rails and a disclosed spread schedule reduce guesswork.
- Multiple exit channels lower redemption risk for any single line.
- Regulated wrappers make it easier for wealth managers to book positions.
The result: art exposure that behaves like an alternative credit line on liquidity, not a museum vault.
