How this banking tycoon went from billionaire to bankruptcy – to sell his art at Christie’s

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On Thursday, June 9, auction house Christie’s sold “masterpieces” from the Alana collection, which it calls “one of the most important collections of Italian Old Master paintings, sculpture and antiques” ever put up for sale in New York.

The 50-piece collection, which toured alongside Impressionist, Modern and Post-War works, had traveled to Hong Kong, London, Los Angeles and New York and was offered at a “single owner” auction held at Rockefeller Plaza in took place Manhattan. Expected by Christie’s to fetch between US$30 and US$50 million, only 22 units were sold for a total of just US$19 million. “Although the sale fell short of our expectations, the importance, beauty and encyclopedic nature of the collection was widely admired in Asia, Europe and the United States,” said a Christie’s spokesman.

The collection belonged to Alvaro Saieh, formerly one of Chile’s wealthiest businessmen. Saieh, who debuted on forbes’ List of world billionaires in 2013 with net worth of $3 billion and net worth of $3.2 billion in 2018, has been through tough times recently. Its $1.8 billion debt-ridden Corp Group Banking (CGB) failed to make interest payments on $500 million in bonds and filed for bankruptcy in June 2021. As a result, Saieh crashed forbes‘ List of the world’s billionaires 2022 published in April. That same month, Christie’s announced the sale of its collection; Although his name did not appear in any of the promotional materials, both Christie’s and CGB confirmed his ownership.

According to an April announcement by Christie’s, proceeds from the sale should benefit a non-profit organization focused on arts and education. But someone familiar with the auction said only a portion of the proceeds would go to charity.

When asked about the auction, a Saieh spokesman said Saieh’s daughter, Catalina, was involved. Catalina, who sits on CGB’s board of directors, is chair of the family foundation Aprendamos and Descubreme, both of which fund opportunities for people with cognitive disabilities, and vice-chair of the family foundation CorpArtes, which supports the arts in Chile. She could not be reached for comment at the time of publication.

Saieh, 72, has long had an interest in art. “To stand in front of a Leonardo for 20 minutes and listen to the commentary of one of the best scholars is paradise for me. It’s one of the tremendous privileges that comes with being a collector,” Saieh said The art newspaper in 2012. “When I buy one painting, I sell another,” he said.

He’s also selling his apartment overlooking Manhattan’s Central Park; He bought it for $26 million in 2007 and listed it at Sotheby’s this spring for $49 million. Saieh still owns a co-op in town, which he is run by British journalists Harold Evans (d. 2020) and his wife Tina Brown (former editor of vanity fair magazine 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. As the first in his family to go to college, he became one of the “Chicago Boys” – a group of economists who, after graduating from university in Chile, went on to study at the University of Chicago under Nobel Prize-winning economist Milton Friedman. These economists – active in the 1970s and 1980s – moved back to Latin America and took up government duties; some were tied to Chile’s military dictatorship under General Augusto Pinochet. Saieh, who has a Ph.D. in economics from the University of Chicago, first worked at the United Nations and later joined the Central Bank of Chile as a research manager.

Amid a wave of privatizations under Pinochet’s rule (1973-1990), the Bank of Santiago decided to sell one of its banks, Banco Osorno. According to a rare 2017 interview with a Chilean news outlet, Saieh, who was hired as a consultant by a group of interested businessmen, was offered a chance to buy 10% of the bank and manage it once it was acquired. The group bought the bank for $10 million in 1986; Saieh paid for his 10% share by tapping into his savings and borrowing money from his mother (she and his father owned a clothing store called “Casa Saieh”). When Spain’s bank Santander bought a 51% stake in Banco Osorno for $496 million a decade later, Saieh owned 14% of the bank, worth nearly $130 million. A year before the Santander deal, he had spent $60 million to acquire Banco de Concepcion, later renamed CorpBanca and becoming the fifth-largest private bank in Chile.

Over the next two decades, Saieh branched out into retail, buying supermarkets and chain stores, often financing the stores with debt. He also acquired a majority stake in one of Chile’s leading media conglomerates, Copesa (Consorcio Periodistico de Chile). By 2013, he had invested at least $300 million keeping those companies afloat, according to a company filing. To raise this money, he sold his interests in two insurance companies for approximately $165 million that same year.

In 2014, Saieh’s CorpBanca agreed to a merger with the Chilean arm of Brazilian bank Itau Unibanco. Although the deal was scheduled to take two years to complete, the parties entered into a credit agreement under which CGB borrowed a total of $1.2 billion (of which $250 million could only be used to refinance an existing loan). ) and used its eventual stake in the combined entity as collateral.

Cartica Management, an American investment firm with a minority stake in CorpBanca, sued Saieh, CorpBanca and CGB in 2014 for securities fraud, claiming that the deal undervalued CorpBanca’s stock and furthered Saieh’s interests to bail out his bleeding supermarket chain SMU. Saieh’s lawyers rejected the allegations. The lawsuit was eventually dismissed and the deal closed, but according to Mike Lubrano, Cartica co-founder and now CEO of Valoris Stewardship Catalyst, a consulting firm based in Washington DC and Austria, the merger gave Saieh a line of credit and interest rates Saieh never should have had . “The fact that he defaulted [in June 2021] was a justification for us because it proved the loans he took were undervalued, you know he was a risky bet,” says Lubrano.

A Saieh spokesman said the line of credit was used to “refinance existing … loans with bank stocks as collateral” and as a “safety net for the transaction.”

Separately, the bank merger went through in April 2016, creating Itau CorpBanca – and the ADRs began trading on the New York Stock Exchange. Saieh-controlled Corp Group Banking owned about 26% of Itau CorpBanca.

While some of Saieh’s problems were self-inflicted, others were beyond his control. In 2019, violent protests erupted in Chile over higher public transport fares and low pension funds, causing economic turmoil for the country and drastically reduced dividend payments by Itau CorpBanca to Saieh’s CGB. Then came the global pandemic. CGB began missing interest payments on the $500 million debt, first in September 2020 and then again in October of this year. In April 2021, CGB made no principal payment (and interest) on the Itau Credit Line. When CGB filed for bankruptcy in June 2021, it was $1.8 billion in debt.

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, after months of back-and-forth with creditors, Corp Group Banking reached an agreement on its Chapter 11 plan Up to $30 million in payments over 15 years. The bottom line: Saieh will no longer own shares in Itau CorpBanca.

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