Family Classic Cars in San Juan Capistrano has launched an investment fund that aims to give investors a new place to park their money.
The Family Classic Cars Fund I LP plans to raise $120 million, with a focus on smaller investors. It has started with $15 million drawn primarily from parent Family Classic Cars, an 11-year-old operation that buys and sells vintage, classic and muscle cars, and provides related services, including repairs, insurance and storage.
“My thought was, ‘It would be nice to find a way to get everybody involved in this,’ ” said Marc Spizzirri, owner of Family Classic Cars. “The best way to do that was creating a fund that would take pretty much any-level investor who has an investment portfolio.”
The fund’s minimum investment is $10,000. It invests in cars at prices ranging upward of $1 million.
“Good Asset Class”
“This business was one that was a hobby for some years,” Sprizzirri said. “Paying attention anecdotally, we realized what a good asset class this was, but we’d never done research. Some time in the last year, we decided to take a [deeper] look. There are indices out there that track classic cars as an investment.”
Data from London-based research think tank Historic Automobile Group International show a 12% annual growth rate for the value of classic car collections between 1980 and 2008. That compares with a 2% annual growth rate in gold prices over the same period. Classic cars have outpaced the S&P 500 over the past three decades, according to the research group.
Spizzirri has plenty of experience with cars. He spent more than three decades running his San Juan Capistrano-based Family Automotive Group, which sold its Family Toyota in 2007 and Family Honda in 2010.
“I sold all my other dealerships,” Spizzirri said. “I had dealerships where we were doing $400 million in revenue. The idea now is to have some fun with this. My partner John [Cappelletti] and I are fortunate to have business be good. With this new fund, I think we can make the market, somewhat.”
Management of Family Classic Cars Fund is overseen by Thomas Carter, chief executive of San Diego-based financial services firm CapitalDPO Inc. and a founding member of the fund.
The goal is to grow the fund to $120 million to give Sprizzirri and Cappelletti more to work with as they seek deals.
“By having that amount of capital to work with … they could buy up entire collections to get better pricing,” Carter said. “Overall, this fund gives their business the strength of capital to negotiate.”
Idea
The idea of launching a fund was initiated by conversations with Carter about taking Family Classic Cars public through a direct public offering of shares that would be sold to the public without involving investment banks or public shell companies.
“In evaluating their business and going through documents … I thought [the investment concept] was interesting, and we continued to have dialogue about that,” Carter said. “We took 50% of the company’s assets and capitalized the fund with that. That’s what started the Family Classic Cars Fund.”
Carter pointed to two similar funds that target classic cars—the Classic Car Fund and the IGA Automobile Fund, both based in Europe.
“The only competitors domestically would be the auction houses, really,” he said. “They’re the ones doing this sort of business.”
Family Classic Cars doesn’t shop at auctions.
“It’s difficult to get the right values at auctions,” Spizzirri said. “We buy mostly from private parties. We have bought from estates or surviving spouses, or a collector who’s planning to liquidate. Our success with that is buying the entire collection. The profitability of the margin of the cars is very high because we buy in collection, as a large group.”
A public offering is still a potential move in the future, Spizzirri said.
“I am a car enthusiast and a classic-car collector, and this is a passion for me,” he said. “I want to bring access to everybody. It was a negotiation to let us bring in a $10,000 investor; I would’ve brought in a $500 investor. The public offering will enable more opportunities like that to occur. But right now, we got to get up and running with this fund.”
