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Qatar HNWIs increasingly look at precious stone asset class

Santhosh V. Perumal

Sunday، 22 May 2022 11:24 PM

The Amma Group, the only fund in the highly specialised area of coloured diamond investment, finds increasing appetite among Qatar's high net worth individuals, especially millennial, for the precious stone asset class.
The group, which already has more than a dozen investors from Qatar, has been receiving good response for its newly launched fifth series of coloured fund, which has a three-year exit route for investors. The minimum investment is $1mn.
The Colour Fund V – domiciled in Curacao, a Dutch Caribbean island – is seeking $100mn in commitments to invest in natural fancy coloured diamonds, along with the most exceptional rubies and sapphires, said Mahyar Makhzani and Philip Baldwin, co-founders of Amma Group, which already has an “important” investors base in the Gulf region.
Asked about the response of the investors, who are primarily high net worth individuals; they said the group has previously worked with the private wealth managers of banks and the response has been “immensely positive”.
Asked about the outlook of the precious stone industry, they said while the market has remained relatively buoyant over the last 12-18 months, "we look forward to a major upturn in the next two years," they said, adding the fund invests only in the rarest diamonds of red, purple, blue, pink, green and orange in colour.
The fund has three primary investment strategies – short term, improve and hold – source diamonds and precious stones from trade dealers, auction houses, private individuals and cutlers. The group’s previous series have made realisations in multiples of the investments, depending on the strategy of the funds.
The fund's short term investment strategy is for meeting market requirements for which stones would be purchased for short term arbitrage between sellers and buyers, which may include brokerage commissions for the fund.
It's improvement strategy include optimisation of market value by creating pairs and sets and re-polishing stones to improve clarity and colour without sacrificing weight.
The fund also employs a hold strategy through which it invest in one-of-a-kind rare stones for long term appreciation.
“The funds have performed very well since 2008 when the first fund was launched. We have created a perfect bridge between the financial world and the diamond industry,” Philip Baldwin said.
“An investment in the fund is targeted to provide an uncorrelated exposure that projects value and generates attractive risk-adjust returns,” they said, adding the fund would constantly monitor mining production, which it believes would provide a reliable prediction of the future supply of coloured diamonds, rubies and to a lesser extent sapphires.
About the exit strategy, they said the fund would endeavour to optimise the exit strategies through continuous analysis and indexing of sales at auction.
It has developed "strategic" relationships with key retailers and auction houses in an effort to ensure that the correct stone is in the correct location and in line with the local market trends.
Elaborating on the scarcity and value; they said around 40% of the diamonds mined in 2018, fell into the industrial category.
Of the total gem-grade diamonds, they said, around 35% were under 0.5carats, 16% were medium size and just 7% were larger than 2carats. Approximately, 1 in every 10,000 diamonds is fancy coloured, they added.

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