Rare Whisky Fund launched in Hong Kong

Rare Finds Worldwide, a global whisky brokerage that offers collectors and investors the opportunity to increase wealth with rare Single Malt Scotch Whisky, has announced the launch of a private equity whisky fund.

Rare Single Malts, according to an article by the South China Morning Post, has reportedly launched in Hong Kong, alongside other cities, aiming to raise over USD24 million, which it will then use to purchase rase whiskey bottles, collections and casks.

The fund will reportedly offer investors an annual return of between 15-20% over 5 to 7 years, should all go according to plan. It will primarily invest in casts, focusing on well-known brands, and distilleries with history behind them, reports Freeman Ho Chun-wing, Whiskey Specialist, Rare Finds Worldwide.

“Cask is a relatively stable in terms of price and has an increasing intrinsic value over the years through ageing. When it stays at the cask, the quality of the liquid increases every single year as opposed to bottle. Bottle prices solely rely on the popularity of these particular bottles,” said Ho of the value of investing in casks over bottled products.

The minimum investment is reportedly GBP100,000, with fundraising initially beginning in late June 2020.

Murray Holdgate, General Partner, Rare Single Malts, said: “This is liquid gold. This is the flight to safety. When the traditional assets have let people down, we’re definitely seeing a thirst for alternative assets.”

“Whisky is one of the best performing assets,” continued Holdgate, comparing the asset to other alternatives and collectibles. Holdgate, alongside his role at Rare Single Malts, is the Founder of investment and development finance company Platinum Rise Capital Partners, which specialises in real estate.

The 2019 Knight Frank’s Luxury Investment Index suggests rare whisky has outperformed other luxury assets. In the same year, a bottle of Single malt Macallan 1926 sold for GBP1.5 million, demonstrating the value afforded by some investors and collectors to the alternative asset.

According to the article, between 2009 and 2019, the value of illusive whiskeys increased by 564%, according to the Knight Frank index, placing it above coins, cars, art, wine, watches and diamonds in the same timeframe.

Investors in Asia have reportedly taken a particular liking to the idea of collecting rare whiskeys. “In the 80s and 90s and during the market crashes, what you saw was a lot of these distilleries actually sold out their whiskeys, and they could not actually predict that there was going to be this big demand 30 to 40 years later. Particularly, when you look at Asia. Asia is now coming in and really starting to pick up on the rare end of the market,” reports Holdgate.

The fund will reportedly look to acquire assets ranging from 15- to 45- years of age for casks, bottles over three decades old, and collections over 18-year-old. The casks are to be stored in insured warehouses in Scotland, and will be registered with HM Revenue and Customs.

In terms of how the investors get their money back, the fund will rely on its brokerage to sell the liquid, said Holdgate. “We're also looking at quality over quantity. We could go out and buy 5,000 cars or 10,000 bottles with the same amount of money. However, when you come to exit, those will be very hard during the process. If we buy, let’s say, maybe 20 or 30 casks, we can easily sell and bottle those, with the correct step strategies also utilising the broker markets and auctions,” he said.