Fractionalisation

Fractionalisation is the process we use at Mintus to give investors the opportunity to invest in high-value art.

Fractional Art Ownership

Through a company structure, individuals are able to buy shares in iconic artworks that might otherwise be out of reach.

Read on to discover how fractional ownership works, the benefits of fractional art investing, and how it is changing the way people invest in high-value assets.

What is Fractionalisation?

Fractionalisation refers to the division of a large asset into smaller portions, allowing investors to own a fraction of the asset instead of the entire item. This concept is especially relevant in alternative investments, such as investing in artworks, where the cost of a single piece can be prohibitively high for individual investors.

While the cost of a multi-million-pound artwork may seem out of reach for many individual investors, fractional ownership provides a more attainable option for those interested in investing in high-value assets. By allowing investors to own just a portion of the artwork, fractional investing makes it possible for a wider range of individuals to invest in iconic masterpieces and benefit from their appreciation over time.

How does fractionalisation work at Mintus?

Mintus sets up each artwork as a company structure. When an investor buys shares in a painting they are buying part of a company, just like traditional equities. The difference is this company’s value is determined by one asset- an artwork.

By using a company structure, investors have access to multi-million pound artworks for a fraction of the cost. This structure also means investors' assets are ring-fenced from Mintus and in the worst case scenario of Mintus’ insolvency, each company has a Board of Directors that will see out the lifetime of the investment.

What are the benefits of Fractional Ownership?

Fractional ownership offers several benefits for investors:

Affordability & Accessibility: by dividing the cost of a high-value asset into smaller portions, fractional ownership allows a wider range of individuals to invest, making it a more accessible option.
Diversification: fractional ownership allows investors to spread their capital across a range of assets, reducing their overall risk and diversifying their portfolios.
Liquidity: fractional ownership offers greater liquidity compared to investing in an entire asset, as it decouples an individual’s investment from the overall investment. Mintus will enable this by operating a secondary market, in which investors will have the chance to sell their shares to other qualifying investors.
Professional management: through fractional ownership, investors benefit from expert knowledge in the management and administration of their investments. At Mintus, investors do not need to worry about the storage, insurance, maintenance, or sale of the artwork. Our team takes care of everything, from sourcing to sale.

What is the difference between fractionalisation and tokenisation?

Fractionalisation and tokenisation are two distinct concepts in the world of alternative investments. The key difference between fractionalisation and tokenisation is the method of investment: fractional ownership uses traditional financial instruments such as physical currency, shares and contracts, while tokenisation involves the creation of digital tokens that takes place on a blockchain platform.

While both fractionalisation and tokenisation serve to increase accessibility and liquidity in alternative investments, fractionalisation offers a number of unique benefits, such as providing investors with a more established and tangible connection to the underlying asset and a sense of stability and reliability.

Ultimately, however, the choice between the two concepts will depend on individual investor preferences and priorities.

The Art of Fractional Investment

There are many alternative assets available for fractional investment that offer unique opportunities to invest in passion projects and different markets.
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One such alternative asset is sports memorabilia, including jerseys, mitts, trading cards, and ticket stubs. However, the market for sports memorabilia has been hit hard in 2022, with many assets trading at less than half of their initial public offering (IPO) value. This lack of a proven track record and potential for negative returns has raised concerns about the health of the sports memorabilia market.

Another alternative asset that has become more accessible through fractional investing is real estate. While the average person may find it difficult to invest in physical property, fractional investment platforms like Here and Futurent offer investors the opportunity to invest in vacation homes, farmland, and even digital property, such as land in virtual worlds like Decentraland.

Luxury goods, such as Hermès bags and jewelry, are another asset class available for fractional investment. The market for second-hand sneakers, particularly those worn by celebrities, has exploded in recent years, with some pairs selling for millions of dollars. While this promises high returns, the lack of infrastructure to verify product authenticity and a relatively short track record for the market have raised concerns about potential fraud and eroded confidence in the market.

The art market on the other hand, had a great 2022, with a record $7.5 billion worth of total auction sales of Old Masters, Impressionist, Modern, Post-War, and Contemporary Art at Sotheby’s, Christie’s, and Phillips. That props up the truism that art is a safe haven in times of economic uncertainty, and suggests that high-quality artworks are still a good long-term investment.

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Frequently Asked Questions

We answer some of your common questions here.

The Artwork

Can I list my artwork for sale on Mintus?

We welcome any owner who wants to unlock liquidity from their collections to contact our Fine Art Team. This includes individual investors, galleries, institutions, and artists. Please reach out if you're interested in listing your artwork on the Mintus platform.

How is the art stored?

All artwork offered by Mintus is stored in climate-controlled, specialist art storage facilities, under a Mintus account. Current paintings are held in a facility in Delaware.

How is the artwork on Mintus selected?

Artwork is acquired through our unique relationships with the world’s most renowned collectors and galleries. Our Fine Art Team marries their own expertise with insights from fellow industry experts to identify one-of-a-kind investment opportunities from established artists with high-growth potential. Our team examines metrics such as the artist’s market track record, recent price velocity and momentum, and the size of their international collector base when making investment decisions.

General

How can I contact Mintus or make a complaint?

If you need support you can send an email to [email protected] or schedule a call using the links on each page of our website. If you need to make a complaint you can write to [email protected]. A description of our complaints policy is set out in the Investment Terms & Conditions for each investment.

Is Mintus authorised by the FCA?

Mintus Trading Limited is authorised and regulated by the Financial Conduct Authority in the United Kingdom under firm reference number 942522. For more details on our regulatory permissions please see the Financial Services Register.

What are the risks of investing?

For more information on risks, see the Memorandum for the relevant artwork and the important disclosures.

Does Mintus sell NFTs?

Mintus does not sell NFTs. NFTs are digital assets. Mintus enables qualifying investors to participate in the art market by purchasing interests in high value, physical artworks. Mintus’ platform facilitates investment in real, iconic artworks created by established artists.

General

Can I sell my shares?

Mintus is planning to in the future introduce a Secondary Market for investors in permitted locations, which will facilitate selling of shares to buyers, dependant on demand. Further details, including the timing relating to launching any such Secondary Market, will be notified to customers in due course.

Why do I need to be a ‘high net worth individual’, ‘sophisticated investor’, or 'qualified investor' to join the Mintus platform?

According to the regulations, certain investments can only be made available to investors who fall within these categories and Mintus must also follow appropriateness requirements when registering investors.

What does Mintus charge?

Fees are dependent on the specific artwork and the specific structure of the investment opportunity. Fees are clearly shown in advance for each artwork / investment opportunity, as displayed in the Memorandum that relates to the artwork / investment opportunity; this document is available to download from the profile of each artwork under the Opportunities section.

Is Mintus only for individual investors? Is it appropriate for wealth managers or private banks?

Both individual investors and institutions can invest in artworks. Individual investors will need to declare themselves to be ‘high net worth individuals’, ‘sophisticated investors’ or 'qualified investors' during the account creation process. Individual investors will also need to pass an appropriateness assessment. Professional investors including wealth managers, private banks and family offices should contact our team for more information on investing as an entity or managing multiple client accounts on the platform.

Is there a minimum investment on the platform?

For the opportunities listed, a minimum investment of $3,000 is required however investments can be for any amount above this and generally range from $15,000 to $100,000. International payments are accepted.

How do I transfer my funds to a USD account?

Funds can be sent from any denomination into our USD bank account. We will show you the estimated cost in your chosen currency during the investment process, however, this may change at the point of transfer and does not account for fees charged by your bank. When transferring, your bank may show an estimated conversion; alternatively, the funds can be sent in your local currency and converted at the point of receipt. Other transfer services such as Wise display exact fee and currency conversion rates to ensure you're sending the subscribed amount.

General

How will I be taxed once shares are sold or returns distributed?

Mintus does not provide tax advice. We recommend that investors obtain their own tax advice as every person has specific tax circumstances. Generally, income and profits generated from your investment can be subject to either income tax or capital gains tax (depending on the individual investor and the specific structure of the investment). Artworks are not income-generating during the period they’re held. If you are unsure about your tax or other legal requirements, please speak to a professional advisor.

Can I port my investment between Mintus’ artworks?

Not directly. In order to take an investment from one artwork to another, shares would need to be sold to a willing buyer on the future Mintus Secondary Market and then proceeds reinvested on the platform. The Secondary Market will only be available in permitted locations.

When can I expect to receive the valuation reports?

Typically, valuations occur at the end of June and December, with reports distributed to investors as soon as possible thereafter.

How are actions surrounding artworks communicated to investors?

All actions in relation to the asset are at the discretion of Mintus. Mintus will communicate with investors on a six-monthly basis with an update on the net asset value, and any further news will be communicated on an ad-hoc basis.

How soon are profits received by investors after the sale of the artwork?

Distributable profits will be made available to investors as soon as possible, once all sale-related administration is complete.

Am I able to reinvest profits from sales with Mintus?

Profits will be received into your Mintus wallet, with the option to withdraw the profits into a bank account or reinvest on the Mintus platform.

Mintus Trading Limited is authorised and regulated by the Financial Conduct Authority (FRN 942522).

Mintus.com is operated by Mintus Trading Limited, a company incorporated in England and Wales (Registration number 12643726).

Important Disclosures

Please familiarise yourself with the following disclosures before investing.

Performance Not Guaranteed

Past performance is no guarantee of future results. This is the case for specific pieces of art, for the artist’s market, for the art market as a whole, for Mintus, and for the funds managed by Mintus. Any historical returns, expected returns, or probability projections are not guaranteed and may not reflect actual future performance. Any investment involves a risk of loss, and prospective investors are urged to carefully consider whether an investment is suitable for them. The value of an investment may go down as well as up and investors may not get back their money originally invested. Investments in art, or in companies owning art, are highly illiquid and those investors who cannot hold an investment for the long term (at least 5 years) should not invest.

High Risk of Loss

All securities involve a high degree of risk and may result in partial or total loss of your investment. Your capital is at risk.

Specific Investment Risk

You should carefully read the Information Memorandum concerning the investment and the underlying asset held, and the associated risks specific to that asset and investment.

Performance Comparisons

The comparisons of historic performance of art, financial assets and commodities are comparisons of historical data which may not be a reliable indicator of the value of any given piece of work. In addition, different investments have differing features including differing risks, differing liquidity, and differing transparency of valuations. The comparisons included here do not reflect actual trading and are hypothetical returns generated based on proprietary methodologies developed by the third parties indicated on each picture. These performance calculations do not include any reduction for fees, which would likely decrease returns; investors in the investment opportunity described in this document will be charged fees based on their investment. Investors should treat the performance data provided in this document as illustrative only and should not base their investment decisions on them. Additional information on the figures provided here is available from Mintus on request.

Third Party Information

Some or all of the information provided, or linked, in this document was prepared or provided by one or more third parties. We have not independently verified any such statements or information, and such states or information may be inaccurate, incomplete or otherwise misleading. Additionally, statements and information contained in this document may include or be based on subjective judgments or assumptions, which may not turn out to be accurate.

Underlying Asset Risk

The underlying asset may be art, or another speculative asset class that may be illiquid, hard to value, and have a high risk of loss itself. Please note that art is not an investment instrument covered by the Financial Conduct Authority. The underlying asset may be valued in a currency other than the invested currency and therefore there may be currency exchange risk in addition to the inherent investment risk. Each asset in which you may invest will have risks that are specific to that asset class and indeed that asset itself. You should review all available material carefully before deciding to invest and, if you are unsure about whether the investment is a good decision for you, you should consult with an authorised investment advisor who has experience of the asset class in question.

Liquidity Not Guaranteed

Investments offered by Mintus are illiquid and there is never any guarantee that you will be able to exit your investments on the Secondary Market or at what price an exit (if any) will be achieved. In addition, the timeframes to liquidate the underlying asset and return capital may be extended beyond those anticipated by the manager due to many factors. You should not rely on any specific timeframes for a return of capital and should not enter into any investment if you think you may need to liquidate the investment in the medium to-long term.

Not a Public Exchange

The Mintus Secondary Market will not be a stock exchange or public securities exchange, there are no market makers, there is no guarantee of liquidity and no guarantee that once launched, the Mintus Secondary Market will continue to operate or remain available to investors. You may not be able to sell your investment easily or without taking a loss.

Forward-Looking Statements Should not be Relied Upon

This website contains certain forward-looking statements that are subject to various risks and uncertainties. Forward-looking statements are generally identifiable by use of forward-looking terminology such as "may," "will," "should," "potential," "intend," "expect," "outlook," "seek," "anticipate," "estimate," "approximately," "believe," "could," "project," "predict," or other similar words or expressions. Forward-looking statements are based on certain assumptions, discuss future expectations, describe future plans and strategies, or state other forward-looking information. Future events, actions, plans or strategies are inherently uncertain and actual outcomes could differ materially from those set forth or anticipated in any forward-looking statements you receive. You are cautioned not to place undue reliance on any of these forward-looking statements.

Not a Recommendation, Speculative, and High Risk

Mintus does not make investment recommendations and no communication, through this website or in any other medium should be construed as a recommendation for any security offered on or off this investment platform. Investments in private shares and non-mainstream pooled investments of the kind offered on the Mintus platform are speculative and involve a high degree of risk and those prospective investors who cannot afford to lose their entire investment should not invest. You should carefully consider the risk warnings and disclosures for the respective fund or investment vehicle set out therein. The value of an investment may go down as well as up and you may not get back the money you originally invest. An investment in a fund, private company or investment vehicle is not the same as a deposit with a banking institution. Please refer to the respective fund documentation for details about potential risks, charges and expenses. In the most sensible investment strategy for investing in private companies, private companies should only be part of your overall investment portfolio. Further, the private company portion of your portfolio may include a balanced portfolio of different private companies. Investments in private companies are highly illiquid and those prospective investors who cannot hold an investment for the long term (at least 5 years) should not invest.

No Access to FSCS

Investments are not covered by the Financial Services Compensation Scheme and your capital is at risk.

No Guarantee of Dividends

There is no guarantee that any company you invest in will pay dividends or other form of income to you.