Security Token Advisors Client Freeport Unveils its Fractionalized Art Investment Platform
MIAMI, FL — October 26, 2022 — Security Token Advisors (STA) is excited to announce the unveiling of its client, Freeport, who is leveraging tokenization to enable a seamless investment experience of fractional shares of art.
Rather than going the NFT route, as we’ve seen a number of projects and companies do with digital art over the past two years, Freeport is geared towards fractional ownership in gallery-quality pieces of art such as original Andy Warhol paintings. Freeport will purchase, store, and manage the works of art while fractionalizing each and offering individual shares to investors via security tokens. Importantly, ownership of the paintings will be displayed in an immersive gallery that has never been seen in the securitized token space.
The platform will make use of the Regulation A+ exemption to raise capital from a blended investor audience of retail, accredited, and institutional investors alike. Under the Reg A+ provision, investors will be able to trade their ownership stakes actively on a secondary marketplace as soon as they wish, as there will be no lockup or seasoning period.
This duality allows investors to:
1) Gain access to an industry whose blue-chip pieces typically outpace the stock market in growth.
2) Actively manage their art portfolios by trading smaller allocations according to market forces.
Not only is Freeport providing the opportunity for everyday investors to own small fractions of art ranging from high six-figures to the $10+ million mark, but it’s also enabling the new dynamic of secondary trading to boost the returns profile and precision surrounding art investing.
It’s quite possible that an Andy Warhol painting is valued at $5 million across 1 million tokens, for example, for a price point of $5 per token. Upon closing the $5 million syndication, prospective investors will have to look at the secondary markets to buy new allocations (or add to existing allocations) in that piece of art. Prices on the secondary markets will vary based on token supply and investor demand, thus creating the real possibility that tokens may begin trading at a premium to the artwork’s intrinsic value.
For example, with strong investor demand on the secondary markets, token prices may see an upwards movement from $5 to $7, a change of 40%, which existing token holders can take advantage of to sell some or all of their existing holdings. Rather than needing to wait for some sale or exit to recognize gains on artwork, investors control their holding periods and decision making.
In the event that prices fall on the secondary markets due to selling pressure or lack of new investor demand, current investors also have the option of buying additional tokens at a discount to the piece’s intrinsic value, thus lowering their average buy-in points and creating a more attractive long-term investment opportunity.
*Please note that these are simply sample conceptual cases and do not guarantee that the tokens will trade accordingly.*
Finally, Freeport will implement elements of web3 that bring to life further benefits of tokenization — things like access to locked liquidity and a meshed physical/digital experience that allows users to display their NFTs alongside their favorite Warhol.
Alec Beckman, Head of Consulting at Security Token Advisors, states that, “This is what the security token industry is missing: the ability to purchase typically unavailable assets in a cool and sleek looking way. We hear a lot about real estate, private equity, and venture where the marketplaces are very number and finance heavy. Freeport is doing the exact opposite by taking the fractionalization of assets and applying it to something more fun and beautiful like Museum Quality Art.”
Freeport will be officially launching in Spring 2023, and already has a 350+ person waitlist. Interested users and investors can sign up for the waitlist here to stay up-to-date on launch details and opportunities.
About Security Token Advisors
Security Token Advisors is the leading consulting firm in the security token industry, assisting asset owners ranging from business owners and family offices with large real estate portfolios to governments and sovereign funds in executing a successful securitization leveraging blockchain technology. These engagements consist of leading an asset owner through the process of tokenizing an asset, beginning with token structuring and working with applicable vendors, including legal support, broker-dealer engagements, and investor relations strategies. STA’s experienced team has worked through many compliant securities issuances and has worked with a wide variety of asset classes and jurisdictions.
Get in touch with STA here.
Media Contact
Anayansy Hernandez, anayansy@securitytokenadvisors.com
