Certified Collectibles Group (CCG), including the coin grading firm NGC, has been acquired by the investment company Blackstone. In a joint press release, both companies said that Blackstone acquired a majority stake in CCG. The deal values the entire company at more than $500 million. CCG founder Mark Salzberg and CCG CEO Steven R. Eichenbaum will retain a significant minority stake. In addition, the team and the company’s leadership will remain the same.
Mark Salzberg stated enthusiastically: “When I established CCG, I had a vision that we would transform collectibles into an asset class that is trusted by collectors, dealers and investors around the world.”
In this vision, a collector no longer needs his own expertise to determine the “value” of a coin, for example, based on his experience or by talking to experts. All they need is a universal grading scale and a look at the holder.
CCG seems to have achieved the goal: investors have realized how valuable the collector market is. But how did this come about? And what does it mean for the numismatic market? And what will happen next?
Years of Growth Attract Investors
Collecting has been booming, especially since the pandemic. Although coin collectors like to ignore this fact, their beloved items are just a small piece of the puzzle of this business – and not even the most valuable one. Currently, the market for trading cards is skyrocketing, particularly in the USA. Regarding the high-price segment of the collectibles market, you can hardly speak of wealthy collectors anymore. In most cases they are rather liquid investors.
Blackstone Principal C. C. Melvin Ike puts it like this: “As thematic investors, we look for exceptional entrepreneurial teams succeeding in growing markets, and CCG is a great example. We have been closely following the rise of the global physical and digital collectibles industry for several years.” They want CCG to grow, grow and grow.
First Auction Houses, then Grading Firms, then …?
Let’s not just think about the last one or two years, which were mainly dominated by Covid. At a first stage, the investment company Noble Investment was interested in auction houses in the fields of numismatics and philately, and also bought the traditional English company Baldwin’s.
Then, in the Covid year, investors laid their eyes on grading firms. At the end of 2020, a group of investors bought CCG competitor PCGS for about $700 million. At the time, the investors were not (yet) interested in the numismatic department but rather in the much more profitable field of trading cards. And now CCG was acquired by investors, too.
What Will Happen after Covid?
We have been experiencing that the coin market is drifting apart for a while now. On the one hand, there are traditional coin collectors who are passionate about their collections and often keep them for years or decades. On the other hand, there are buyers who pay ever new record prices for single coins, which frequently reappear in other auctions a few years later and are passed on for even higher sums. Those who pursue this approach are rather driven by the desire to purchase a profitable investment product.
The case of PCGS is still too young to see how the acquisition by investors will change the market. But let’s look back at Noble Investment and Baldwin’s. Ian Goldbart, stockbroker and founder of Noble Investment, quickly realized that coins and stamps were not enough to keep investors happy. In 2016 he summed up: “Investors simply expected us to expand. Since this was not possible on the coin market, we looked for other branches.” Like the art market. But that was not enough either. All these firms operating in the collectibles markets do not work like traditional stock market companies. The experts in these firms did not want to only think about the stock value when purchasing material, holding auction sales or increasing the value of the company to unprecedented heights. Numerous numismatists went away – even Ian Goldbart founded his own company to be able to dedicate his time to his beloved coins once again.
Will CCG, PCGS and auction houses continue to boom after Covid? At one point, more profitable possibilities might arise. And then the love between a company like Blackstone and a collectibles market company can end quickly. After all, the Blackstone’s Tactical Opportunities (Tac Opps) division is responsible for the acquisition, and defines itself as an “opportunistic investment platform”. Opportunistic means on the one hand, it is a platform looking for investment opportunities. However, opportunistic also means being mainly concerned about their return – which is certainly the case.
Find out more about CCG on the website of the Certified Collectibles Group.
This is the Blackstone website.
And here you can find the Tac Opps site of Blackstone.
We reported in detail on the acquisition of PCGS by a group of investors.
And in 2016 we explained the context of the changes at the London coin market.