Rumors that the world’s third-largest art auction house is considering an IPO are gaining steam after ArtInfo published a story dubbed “Poly Auction House Plans to Go Public With IPO, Becoming the Sotheby’s of Mainland China” earlier this week. If the rumors pan out, the IPO would likely generate a lot of investor demand.
Unfortunately, the stock will likely be restricted to China’s A-share market, which is closed to most non-institutional foreign investors. Should your broker or wealth manager provide access to the shares, however, there are several compelling reasons to consider investing in Poly Auction. Here are three:
1) Outsize growth. It’s taken Poly Auction just six years to transform itself from a start-up to the third-largest art auction house in the world. The company’s spring sale earlier this year brought in $947.86 million, according to ArtInfo. That was more than twice the sales of Christie’s and Sotheby’s in Hong Kong. All told, Poly netted $60 million last year and holds assets of more than $300 million.
2) Creeping westward. Not content to serve just the Asian art markets, Poly expects to open an office in New York sometime this year (per Forbes). The company’s focus on contemporary Chinese art gives Western art collectors access to a new trove of work including a $62 million scroll landscape by master Wang Meng that’s some 700 years old.
3) Peer pressure. The art auction community is a small, tight-knit clique, and that means investors don’t have a lot of historical precedence to go on. Sotheby’s (NYSE:BID) – the world’s second-largest art auction house – traces its roots back to London in 1744. Nearly 250 years later, the company went public on the NYSE. Since then, the stock’s risen 375 percent (at a compound annual growth rate of 7.09 percent since 1988). Those numbers aren’t off the charts, but Poly International Auction is in a very different part of the growth curve than the 250-year-old Sotheby’s. That could prove tantalizing to investors eager to get a stake in China’s rapidly growing art market.
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