Korea’s first institutionalized fractional art offering makes hit

South Korea’s first institutionalized fractional investing in work of art opened by , has made a big hit, heralding the rosy future of Korea’s fledgling fractional investment market. According to ArtnGuide, its fractional public offerings of Yayoi Kusama’s famous 2001 artwork “Pumpkin” drew more than 3 billion won ($2. 3 million) in total as of Tuesday, more than double its initial subscription target of 1.

23 billion won. The platform operator Yeolmae said on Monday that its first institutional art fractional offerings raised more than the initial target just one hour after the subscription began in the morning on the same day. This is Korea’s first institutionalized fractional investment in artwork after the Japanese contemporary artist’s work got the nod from the country’s top regulator, the Financial Supervisory Service (FSS), for fractional investments on Friday last week.

Yeolmae’s Founder and Chief Executive Officer (CEO) Kim Jae-wook expected that fractional investing in artwork as a legitimate alternative investment asset would enable the country’s investors to have more diverse investment portfolios. A slew of other artwork fractional investment offerings are slated for market debuts. Art Together, a subsidiary of major Korean art auctioneer K-Auction, in the first week of this month submitted its registration statement for fractional investments in Kusama’s another artwork, also titled “Pumpkin” (2002) in a different size.

Seoul Auction Blue, operator of the fractional art investment app Sotwo, is also waiting for a cue from the FSS for fractional investments in the artwork “Dollar Sign” by Andy Warhol, while fine art fractional investment platform Tessa is expected to submit its registration to the FSS by the end of this month. Yeolmae has submitted its registration statement for fractional investments in Kusama’s 2001 artwork to FSS, with a plan to allow retail investors to buy 12,320 shares at 100,000 won per piece. The company purchased the artwork at 1.

12 billion won. The public subscription of shares of Kusama’s 2001 “Pumpkin”, which opened on Dec. 18, will end on Dec.

22. The maximum number of shares each investor can subscribe is 300 shares, or worth 30 million won. By subscribing to the shares, individual investors can hold fractional ownership in the artwork, and later take profits after the art is sold.

Its subscription is available in ArtnGuide, while investors should pay with virtual accounts at K-Bank, Korea’s internet-only bank. Retail investors will be able to grab 90% of the entire shares, while the rest 10%, or 1,232 shares, are already owned by Yeolmae. The company will also purchase any forfeited shares later.

ArtnGuide’s fractional sale of Kusama’s “Pumpkin” marks another significant step forward in the Korean fractional investment market after . The change, effective as of Aug. 1, allows fractional investment platform operators to register as financial companies that can trade in fine artwork, cattle and music copyrights as investment securities.

About five fractional investment platform operators including artwork traders Tessa, Sotwo, ArtnGuide and Art Together, as well as one live cattle fractional investment operator, Bancow, were anticipated to register at that time. The move comes as fractional investing or buying tiny shares of non-traditional assets, which offers an opportunity for smaller investors to participate, has become increasingly popular globally. But it has risks like the unpredictability of the artwork’s sale given the fact that investors cannot cash out before the underlying art asset is sold.

Yeolmae plans to register a group of one artist’s work in February next year to issue them separately in phases, said Kim. Byeong-Hun Yang at.