New lending will have to be fully asset-backed with true provenance and transparency in the flow of goods and monies

Aruna Gaitonde

After handling Gem & Jewellery (G&J) industry financing as a banker for many years, Erik A Jens sees an opportunity now that numerous banks are withdrawing from the sector. He is exploring opportunities to establishing a financing firm focusing on ‘financial solutions’ for the art and jewellery sector.

However, Erik Jens firmly believes that financing should be asset-based. He also believes that solutions lie in technology, not like the current practice on receivables on paper only. This idea emerged into the initiative around starting up a Fintech company called LuxuryFintech.

Jens, as the former Global Head – Diamond & Jewellery Clients – AMRO BANK N V, comes armed with professional experience in banking, financing and investments. He has specialized in private wealth management solutions, investments in hedge funds, private equity and real estate industry. He had also served as director/advisor to various hedge funds and private equity funds at Fortis, which later became ABN AMRO.

Erik Jens has also held various senior executive positions at Fortis MeesPierson in banking and investment services in the Netherlands, Belgium, Switzerland, Netherlands Antilles, Ireland, United Kingdom, USA and Asia.

Here, in an interview with Rough & Polished, Jens speaks on the current challenges for the global G&J industry and also suggests solutions for the finance/liquidity issues faced by the troubled industry.

At present, industry members claim there is a financial crisis with banks pulling out of the G&J industry. It seems like a more serious situation than ever before, with debt defaults and liquidity issues plaguing the growth of the industry. Can you comment on the current status of the global G&J industry?

First of all, I do not think there is an overall financial crisis in the G&J industry. Companies with a good strategy, growth plan and with a more corporate identity have access to liquidity in general, not only the larger companies but also the relatively smaller ones. Having said so, there are certain markets where there is temporarily lack of liquidity… that’s true.

But I believe that helps in the quest of industry stakeholders towards improved bankability. Like in any other sector, such as real estate and high tech in the past, the ride for free money is over, and the bubble of over financing is coming to an end. Very healthy. Secondly, the other trend I see that the newcomers in financing the G&J industry are only writing tickets with larger companies for sizeable amounts, like $150mln plus. So there is a challenge for the middle and smaller market, the SME type of companies. Not for finance but also the challenge for opening bank accounts for payments for instance due to enhanced compliance regulations. And sadly enough, even great companies, complying with all regulations, get refused as the sector is seen by banks and regulators as increased/high risk. So why bother to allocate scarce balance sheet money is often the question with those institutions. All and all the wording around the financial crisis in the G&J sector needs quite some nuances.

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Source Rough&Polished