Dennis Doherty is looking for an underwriter for the private placement of his new investment fund. If all goes according to plan, he will raise $250 million from institutional investors in the first two weeks of June. Then he can go and blow it all on paintings.
“I can make a very good case based on raw data since the end of World War II that the market appreciates at about 12%,” says Doherty from his ranch in New Mexico. “Impressionists always do much better than the average,” he adds.
The fund won’t be open to everyone. The minimum investment is $25 million, and the total sum invested has to be less than 1% of the investor’s aggregate value. The money will be spent on art – “only extraordinary pieces can be acquired”, promises Doherty, “and only by dead artists” – which will then be sold at a profit 10 to 14 years later.
Of course, art doesn’t pay dividends. Indeed, it needs to be insured, stored and restored. “It has a negative carry,” is Doherty’s way of putting it. Even so, he’s hoping that his fund will see returns above 20%.
Finding the art shouldn’t be a problem. “We have a suspicion that when it becomes known that there’s a pool of $250 million out there, sellers will come to us,” he reasons.
Once he’s bought the art, Doherty hopes to lend it out to museums.
And the name of the fund? Unless the underwriter decrees otherwise, “Lyons & Hannover” seems much more likely than “A Load of Pollocks”. Felix Salmon
