LONDON, June 12 -- Anchorage Capital Partners ("ACP") (a
Mercantile Investment Group company) recently reported to the Financial
Times that it is preparing to launch a closed-end fund which will invest in
the rare and vintage guitar market. The US$100 million fund is to be listed
on the Channel Island Stock Exchange (CISX) in Euros for a 10-year term.
According to ACP, the vintage guitar market has comfortably
outperformed traditional markets ever since it has been tracked by an index
created by Vintage Guitar magazine in 1991. "The '42 Index' which is widely
accepted as a conservative tracking device for the vintage guitar market,
has demonstrated an average annual return of over 31% since it began 17
years ago," said Tommy Byrne, co-founder of ACP and Chief Investment
Officer of the Fund. He went onto say, "Historically, when the major
markets have collapsed, this market has plateaued until the traditional
markets picked up again."
Currently the Fund has a number of institutional investors interested
in subscribing for shares of the Fund in amounts between US$5 million and
US$10 million each, though this is contingent on finding a qualified Lead
Investor. Valerio D'Arco, a Senior Associate at ACP said "Most of the
interest we are seeing is being generated from the wealth management
divisions of private banks, family offices and fund of hedge funds. We are
also beginning to see more interest from High Net Worth Individuals who
want to take advantage of being able to invest some of their retirement
money into a listed security."
With many vintage guitar models trading well over US$250,000, ACP
doesn't see the market being driven up simply by the Baby Boomer
generation. The Company views generations X and Y as a major part of the
equation. Mr. Byrne explains, "The vintage guitar market, like some of the
other exotic investment strategies such as art and wine funds can be
enjoyed while holding them, but where this market differs significantly is
in how the guitars improve every time you play them. The vibrations on the
wood improve the sound of the guitars, so the more they're played the
better they sound. The younger generation knows this and has an increasing
appetite for acquiring their favourite models. After all, that Monet
hanging on the wall doesn't improve every time someone looks at it."
The Fund has structured a lending strategy that will allow investors to
borrow the guitars so they will continue to be played and enjoyed. The Fund
will also lend guitars out to well-known musicians for tours, TV and movie
spots adding value to the investment as it obtains memorabilia status.
Dr. Bernard A. Wagenmann, also a co-founder of ACP, emphasized that
"...though this exotic strategy has proven to be a tremendous investment,
investors cannot expect the same type of liquidity as in the stock and bond
markets, which is why potential investors should view this as a long term
investment strategy."
The Fund also benefits from an advisory board of guitar experts,
private equity managers and professional musicians, one of which is Elliott
Randall, best known for his lead guitar work with the band Steely Dan on
mega-hits including Reelin' In the Years. Another professional musician on
the Board, Robbin Thompson, once the lead singer for the Bruce Springsteen
band Steel Mill, commented, "Since so many passionate collectors are
unlikely to ever sell their own stash of vintage guitars, this fund helps
prevent them from taking their investment to the grave."
http://www.anchorage-capital.com
See Also
