backWeb-based bloodstock exchange on the way
by Pete Denk
Friday June 20, 2008
People will be able to buy and sell fractional shares in racehorses at an online bloodstock exchange expected to debut later this year.
Created by Valentine Feerick, a European-based horse owner,
www.blood-ex.com made its soft launch in conjunction with the Royal Ascot meeting. Users can test the interface and practice buying shares until June 23, when the site will reset in preparation for real trading later this year.
The European site is expected to be up and running later this summer, to be followed by America. Feerick said he plans to expand to Australia, the Middle East, and Asia.
“The explicit intention is to turn this into a global exchange, with tabs for different continents,” Feerick said. “The idea is two-fold: to allow the general racing public to have an interest in bloodstock where they previously could not and to allow owners the ability to partially liquidate a racehorse during its racing career.
“We believe the industry is moving toward syndicate shareholdings and away from single ownership. The economic climate is that fewer and fewer people can afford the upkeep and costs of owning a racehorse.”
Blood-ex will charge a 5% commission fee to sellers and nothing to buyers. For every 1% interest the legal owner of a horse wishes to sell, 150 shares will go onto the Blood-ex market.
The shares will not carry any responsibility for training or upkeep costs nor will they entitle the buyer to earnings. Payouts are made only when the horse goes through a sales ring or is sold privately. Private sales will require approval from Blood-ex.
No more than 49.9% of a horse may be sold on Blood-ex. The owner must sign an agreement that requires the horse be sold at some point in the future, so the share prices can be paid out.
“Our terms and conditions require the owner to crystallize the value at some point,” Feerick said. “If the owner wants to keep the horse until retirement, they still have to put it through a sales ring and buy it back themselves. There must be a moment in time when the value is determined.”
Once a horse goes through the auction ring or is sold privately, trading is suspended, and shares are cashed out. Per the agreement owners must enter in order to sell on Blood-ex, sale proceeds will be sent directly from the auction company to Blood-Ex for disbursement, Feerick said.
“The goal is to increase the flow of money coming into bloodstock globally,” Feerick said. “In America, there’s been a number of reports of hedge funds being established. Having counseled with hedge fund managers, it is clear that this type of vehicle is exactly what they’re looking for.
“The people who operate and invest in hedge funds…they are used to buying assets on a trading exchange. It’s very important racing is able to attract and secure its fair share of this form of investment.”
Pete Denk is a Thoroughbred Times staff writer