BILLIONAIRE CHRONICLE SPECIAL FEATURE Are Classic Cars a Good Investment?

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Richard Hawken The Car Fund

Richard Hawken, the Manager/Director of The Car Fund Talks About Classic and Collectable Car Investing And the Porsche Carrera Cup

Ex-Investment Banker, self-confessed petrol-head and Porsche racer Richard Hawken had the vision to create a unique one-stop-shop for UHNWI and Billionaire car collectors. That vision is now a reality fuelled partly by his obsessive passion for cars and his OCD level attention to detail. “A year ago I was working for a Mayfair based Hedge-Fund in London but had aspirations to build something much bigger than a fund. I wanted to build a business that would almost become self-fuelling, it’s what my clients need and most certainly what they want; I know because they keep asking me”.

Hawken’s dream has always been to offer a multi-service product for car collectors under a single roof offering investments, concierge-style services, and high-end storage. So when he met serial-Entrepreneur and technologist Karen Lewis on a supercar rally who had already built the framework of a luxury car storage business in Guernsey, it clicked into place and completed his plan.  “Karen and I have been working together for less than a year, but we’ve known each other longer. What we’ve achieved in our first year has been just incredible. Our clients now have access to a fully climate-controlled luxury car storage facility in offshore Guernsey, a full suite of car-concierge services under the Private Client Office and investment returns from the best-in-class luxury asset under The Car Fund”.

The Car Fund

The greatest performing asset class over the last decade hasn’t been Equities, Bonds or Real Estate; by comparison, they exist in the dark shadows of investment grade Luxury Asset classes and in particular Classic and Collectable Cars (C&CC). Tax efficient returns in excess of 20% are often considered by traditional investors risky, or just plain unbelievable.

Hawken who runs luxury asset investment firm The Car Fund quotes publicly available statistics from amongst many the Knight Frank Wealth Report 2018 to support his investment thesis. “It’s not just our data; you can see the same results from auction houses, Hagerty’s, FT, and Bloomberg. C&CC has been the best performing asset class over the last ten years returning an average 334% over the decade – 33.4% per annum. That’s including the two softer years we’ve seen since peaking in 2016. Like any market C&CC are quite cyclical, moving in 4 to 6-year rotations”.

Hawken believes 2019 could be the start of a newmore bullish cycle for several macroeconomic and wealth-effect reasons.

Over the last two decades, we can see a correlation between market corrections and increasing car prices. UHNWI typically get the best investment advice the earliest, plus let’s face it. They’re already mentally smart having amassed their fortunes. TCF supported by external data has found that leading up to steep market corrections or “bear markets” C&CC outperform handsomely owing to their negatively correlated haven asset status.

 Another reason investors look to an investment fund is to offer diversification. Many collectors are also enthusiasts of a particular marque, so their stable tends to be full of all Ferrari or Aston Martin for instance. TCF will invest between £250k and £10m on top of the market classic and supercars, but no more than 40% of the fund will flow into one manufacturer keeping risk parameters nicely balanced.   

The esoteric skill in managing a car fund is in simplistic terms, how well you can buy the cars, explains Hawken. “Anyone can sell a car at market value, there’s no skill in that, but being able to buy with enough upside for investment is ultimately how the fund is measured.”

Over his 25 year career, Hawken has amassed a staggering client portfolio of some of the World’s most esteemed investors, collectors, specialists and curators from all walks of life including Royalty, celebrities, and musicians. Typically they own the finest examples of the best cars, but they also have great works of art, yachts, horses, and planes. “We’ve found UHNW collectors are more comfortable enlisting our team than an exotic dealership or auction house when wanting to rotate their car collections. They like to stay deeply under-the-radar with total anonymity, a prerequisite. They [collectors] are very private, discreet people. Understandably they don’t want their private affairs shared, leaked or discussed, so everyone respects the private client office and its no-compromise anonymity policy.” 

Lordes Private Client Office

The LPCO was launched in September 2018 to offering a one-stop-shop suite of services for UHNW car collectors. It was born from a blend of Hawken persistently being asked for concierge styled services including transportation, storage, insurance or assistance with buying or selling a luxury car. “Because of my dual background in investment banking and motorsport, clients see me as ‘the car guy’ which I love – because that’s what I am – a grubby little petrolhead in a tailored suit. Because of that people tend to trust and rely on my recommendations, but I found I was merely handing business to other firms, or worst case, saying no…and I hate saying no to business.

Combining the suite of products means we can offer our clients a full-product service offering all over the world. Services that are sometimes quite hard to find. UHNWI typically want things done yesterday, so we’ve had to adapt to responding quickly. “One of my clients came to the UK to do a track day with expert race tuition from one of our ARDS race instructors. He enjoyed the day and car so much he asked me to find him a car of comparable spec immediately but LHD and ship it to the UAE. We knew who to call and within three weeks the new car had landed, processed through customs and delivered to his door.”

The LPCO team are currently three, but at the rate of expansion the company will need to hire another before too much longer. “The right people are hard to find” explains Hawken. “Luckily my two colleagues are both massive petrol-heads, enthusiasts, and racers themselves, so they understand cars at a forensic level. It’s difficult to teach that; you need to have an aptitude for cars, the ability to understand the clients plus an encyclopedic knowledge of cars to fit in.” 

Lordes Luxury Car Storage

Entrepreneur and leading technologist Karen Lewis has long been a fan of collectable supercars and has amassed an enviable collection herself, including a collection of rare black Aston Martins. It’s this passion that drove her to address a persistent problem – where to store her top marques safely.

 Karen wisely bought an industrial unit in Guernsey and converted it with no expenses spared into a five-star, climate-controlled luxury hotel for hers and selected clients cars. “I’ve always done that sort thing, if it doesn’t exist, I build it which is what I did with international payroll in the mid-1990s before selling it to the Americans in 2014.”

Hawken explains when he first saw the storage facility, he saw a hand and glove fit with his business model. “It was perfect, brand new, clinically clean and enough space for about 200 supercars, with the added benefit of being offshore too. The problem is there is a rarely identified wide gap between a garage and storage facility which owners don’t realise”. Firstly, the temperature and climate are critical for the long-term protection of an exotic car.

Most cars fail due to a lack of care and attention which LORDES has addressed with their comprehensive monthly health checks. Karen’s tech team built an app which allows owners to log in and view their cars or view the monthly health check report or even see their pride and joy live on CCTV – a must-have feature while sipping champagne on the back of a yacht in Monaco.

In just under a year we’ve almost filled the Guernsey facility operating at c95% of capacity having attracted several large, long-term collections from our client base. In reality, for any business to grow that quickly, you know you’ve created something quite special” explains Hawken. “Collectors like Guernsey as it’s close to the UK and northern Europe. Our clients phone us and ask us to deliver their cars to their chosen location on a certain date which my colleagues in the LPCO arrange”.

Marbella is next as the team look to expand the products globally to targeted destinations. The plan is to have Guernsey, Marbella, Abu Dhabi, Macau and possibly London, but that largely depends on BREXIT, so we’ve left London until last”.

Porsche Carrera Cup

Hawken’s racing career spans over 25 years in various tin-top categories, including latterly in the Porsche Carrera Cup.  2019 sees him again racing with Porsche supported by LORDES. “We did well in our debut year in the series finishing in fourth place, even after a bit of bad luck being knocked out of a few races, so this year we are looking to capitalise on lessons learnt and win the championship. The Porsche paddock is a great place to rub shoulders with UHNWI too. It will be a great honour to take our company to the top step of the podium at year end.”

Facebook – Richard Hawken

Twitter – @hawkenr

Instagram – rich_hawken

Web – richardhawken.co.uk

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