Hong Kong tycoon bets ‘diamonds are forever’ with $1.1 billion jewelry fund

HONG KONG — A Hong Kong life insurance tycoon is betting multimillion-dollar antique necklaces and other rare jewelry can be a “safe haven” for ultra-wealthy investors seeking protection from a turbulent global economy .

Billionaire Calvin Lo has launched what he says could be the world’s first jewelry investment fund with a few dozen wealthy investors who have so far poured some $1.1 billion into his “Legacy Jewelry Fund”.

The fund, launched last month, aims to acquire one-of-a-kind necklaces and other pieces from the world’s leading jewelry houses, including Van Cleef & Arpels, Cartier and Bulgari, with the aim of earning exceptional returns as their value increases.

Traditionally, gold has been a more common safe-haven investment when the economy is tough.

But the fund’s 42 investors, mostly from Hong Kong, are wealthy people who see value in “particularly high-end, really rare and collectible jewelry, where there’s only a limited amount”, said said the 46-year-old. Lo said in an interview with Nikkei Asia.

With the funds already invested, Lo said he has enlisted the help of top jewelry experts to find and purchase rare jewelry, although he has the final say on what is chosen.

Pieces must be accompanied by detailed records to prove their authenticity and have cultural or historical value, such as Tutti Frutti, Cartier’s brightly colored jewels encrusted with emeralds, rubies and sapphires.

“Van Cleef & Arpels is known for its Art Deco period as well as its pieces from the 1960s and 1970s. Cartier’s Art Deco pieces from the 1920s and 1930s are among the house’s most iconic, including the legendary Tutti Frutti” , Lo said.

“You have to give it to the big houses to keep such incredible historical records and records to make sure the story continues.”

The Hong Kong businessman – who bought the Mandarin Oriental hotel in Taipei for $1.24billion and also invested in Formula 1’s Williams Racing in 2020 – said he came up with the idea after having a private visit to British jeweler Graff with a client.

When shown necklaces from the 1920s that sold for a whopping $5 million or more, Lo was inspired to start a fund focused on this niche market.

“If I could pin him down, at some point, that’s a win-win for everyone, right?” Lo said, comparing it to Warren Buffett’s purchase of 3,500 tons of silver in 1997.

However, Lo will reveal little about the collection the fund has amassed so far, which he says is stored in a secure vault, and he won’t comment on the kind of returns he expects to see. what it produces for its investors.

He also declined to show physical Nikkei pieces, citing the fund’s strategy, but instead provided photos of diamond-encrusted necklaces and bracelets, some with price tags of around 20 million euros.

Potential investors should view the fund, which he hopes to double in size in “a very short time”, as a long-term investment and should stay in it for at least two years, Lo said.

He acknowledged that the fund was still in its infancy, with more to do in terms of pricing and structure, including an exit strategy for investors.

But he noted there was a strong appetite for people to park their money in “passionate investments” in times of economic uncertainty and growing geopolitical tension.

Tense U.S.-China relations, Russia’s invasion of Ukraine and rising inflation have rattled global markets, but Lo says he doesn’t anticipate some of the worst-case scenarios. dark.

“For me, it will be more optimistic to say that (the outlook) will remain stable,” he added.

In fact, the pandemic has been a boon to his main company, RE Lee International, which insures the lives of the super-rich with hundreds of millions of dollars in bounties.

He also makes investments through private investment firm RE Lee Octagon, which runs the jewelry fund, and Lo said he has his eye on business investments in Singapore and his favorite city, London.

Lo didn’t name anything specific but suggested he was “staying in hotels.”

The insurance business operates in six locations around the world, including Seattle and Shanghai, and Lo plans to expand into London and Europe this year.

But now that he can no longer travel around the world to meet clients – Lo was traveling non-stop for more than a month before the pandemic – he has stayed in Hong Kong, giving him more time with his daughter than he described as an inspiration.

He says he has also had more time to devote to philanthropy.

As well as a charity focused on children, the environment and inequality, Lo last year founded Project 195. The global think tank encourages ideas from experts to address the economic and social challenges posed by the pandemic and make charitable foundations, like his, more effective.

“We often find ourselves giving what we think people want, but we really should be asking,” he said.

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