How This Banking Tycoon Went From Billionaire To Bankrupt And Sold His Art At Christie’s

0

On Thursday, June 9, auction house Christie’s sold “masterpieces” from the Alana Collection, what it calls “one of the most important collections of Italian paintings, sculptures and antiquities by Old Masters. “never offered for sale in New York.

The 50-piece collection, which toured alongside Impressionist, Modern and post-war pieces, traveled to Hong Kong, London, Los Angeles and New York and was offered at an auction. Sole Proprietorship” held at Rockefeller Plaza in Manhattan. Expected by Christie’s to fetch between $30 million and $50 million, just 22 pieces sold for a total of just $19 million. “Although the sale did not entirely meet our expectations, the significance, beauty and encyclopedic nature of the collection has been widely admired in Asia, Europe and the United States,” a spokesperson said. from Christie’s.

The collection belonged to Alvaro Saieh, once one of Chile’s wealthiest businessmen. Saieh, who debuted on Forbes’ list of the world’s billionaires in 2013 with a net worth of $3 billion and whose fortune peaked at $3.2 billion in 2018, has recently fallen on hard times. Burdened by $1.8 billion in debt, his Corp Group Banking (CGB) failed to pay interest on $500 million in bonds and filed for bankruptcy in June 2021. As a result, Saieh fell Forbes‘ 2022 list of the world’s billionaires, published in April. That same month, Christie’s announced the sale of its collection; although his name does not appear in any of the promotional materials, Christie’s and CGB have confirmed his ownership.

According to an April announcement from Christie’s, proceeds from the sale were to benefit a charity that focuses on the arts and education. But a person familiar with the auction said only part of the proceeds would go to charity.

Asked about the auction, a spokesperson for Saieh said Saieh’s daughter, Catalina, was handling it. Catalina, who sits on the board of CGB, is president of the Aprendamos and Descubreme Family Foundation, both of which fund opportunities for people with dementia, and is vice president of the CorpArtes Family Foundation, which supports arts in Chile. She could not be reached for comment at the time of publication.

Saieh, 72, has long been passionate about art. “Being in front of a Leonardo for 20 minutes, listening to the comments of one of the best scholars, is heaven for me. This is one of the enormous privileges that you get by being a collector,” Saieh said. The arts journal in 2012. “When I buy one painting, I sell another,” he says.

He is also selling his apartment overlooking Central Park in Manhattan; he bought it for $26 million in 2007 and put it up for sale at Sotheby’s this spring for $49 million. Saieh still owns a co-op in the town, which he bought from British journalists Harold Evans (died 2020) and his wife, Tina Brown (former editor of vanity lounge magazines and the new yorker) for $6.6 million in 2018.

Saieh was born in Colombia to a Chilean father and grew up in Talca, Chile, 160 miles south of Santiago. The first in his family to go to college, he became one of the “Chicago Boys” – a group of economists who, after graduating from college in Chile, went on to study at the University of Chicago. under Milton, the Nobel Prize-winning free-market economist. Fridmann. These economists – active in the 1970s and 1980s – returned to Latin America and assumed government functions; some were linked to Chile’s military dictatorship under General Augusto Pinochet. Saieh, who earned a Ph.D. in Economics from the University of Chicago, began working at the United Nations and later joined the Central Bank of Chile as a research director.

In the midst of a wave of privatizations during the reign of Pinochet (1973-1990), the Bank of Santiago decided to sell one of its banks, Banco Osorno. According to a rare 2017 interview with a Chilean media outlet, Saieh, hired by a group of interested businessmen as a consultant, was offered the chance to buy 10% of the bank and run it once. acquired. The group bought the bank for $10 million in 1986; Saieh paid for her 10% stake by dipping into her savings and borrowing money from her mother (she and her father owned a clothing store called “Casa Saieh”). By the time Spanish bank Santander acquired a 51% stake in Banco Osorno for $496 million a decade later, Saieh owned 14% of the bank, worth almost $130 million. A year before the Santander deal, he had spent $60 million to acquire Banco de Concepcion, which was later renamed CorpBanca and became Chile’s fifth-largest private bank.

Over the next two decades, Saieh diversified into retail, buying supermarkets and chain stores, often financing the deals with debt. He also bought a majority stake in one of the main Chilean media conglomerates, Copesa (Consorcio Periodistico de Chile). By 2013, he had invested at least $300 million to keep those businesses afloat, according to a company filing. To find that money, he sold his shares in two insurance companies for about $165 million starting that same year.

In 2014, CorpBanca de Saieh agreed to merge with the Chilean branch of Brazilian bank Itau Unibanco. While the deal would not be finalized for two years, the parties entered into a credit agreement in which CGB borrowed a total of $1.2 billion in the form of credit lines (of which $250 million could not be used only to refinance an existing loan), and used its possible participation in the combined entity as collateral.

Cartica Management, a US investment firm with a minority stake in CorpBanca, sued Saieh, CorpBanca and CGB for securities fraud in 2014, claiming the deal undervalued CorpBanca stock and advanced Saieh’s interests. in an attempt to save his cash-bleeding supermarket chain SMU. Saieh’s lawyers have denied the allegations. The lawsuit was ultimately dismissed and the deal was completed, but according to Mike Lubrano, Cartica co-founder and now managing director of Valoris Stewardship Catalyst, a consulting firm based in Washington DC and Austria, the merger gave Saieh a line of credit and interest rates. that Saieh should never have gotten. “The fact that he failed [in June 2021] was a vindication for us because it proved that the loans he had taken were undervalued, you know, that he was a risky bet,” says Lubrano.

A spokesperson for Saieh said the line of credit was used to “refinance existing loans…, with bank shares as collateral” and as “a backstop for the transaction.”

Anyway, the bank merger took place in April 2016, creating Itau CorpBanca, and ADRs started trading on the New York Stock Exchange. Corp Group Banking, controlled by Saieh, owned about 26% of Itau CorpBanca.

While some of Saieh’s problems were self-inflicted, others were beyond his control. Violent protests erupted in Chile in 2019 over rising public transport prices and weak pension funds, leading to economic turmoil for the country and a drastic reduction in dividend payments by Itau CorpBanca to Saieh’s CGB. Then came the global pandemic. CGB began to miss interest payments on the $500 million debt, first in September 2020 and then again in October of the same year. In April 2021, CGB did not make any payment of principal (and interest) on the Itau line of credit. By the time CGB filed for bankruptcy in June 2021, the debt was $1.8 billion.

Earlier this year, CGB reduced its debt to $1.3 billion after selling its stake in Itau Corpbanca Colombia to Itau Corpbanca and then using the proceeds to repay Itau Unibanco.

On Wednesday, June 15, Corp Group Banking reached an agreement on its Chapter 11 plan after months of back and forth with creditors. Creditors will receive Itau Corpbanca shares held by Corp Group Banking, along with 42% of Saieh’s media group, Grupo Copesa, and up to $30 million in payments over 15 years. The end result: Saieh will no longer hold any shares of Itau CorpBanca.

Share.

Comments are closed.