Quantumrock is proud to have launched the first structured, professional investment-grade, and publicly traded gemstone investment product: Rough Gemstone I.
The Luxembourg-based investment structure behind Rough Gemstone I provides professional investors with a unique opportunity to invest in the value creation process of polishing gemstones, without the usual expenses and risks associated with acquiring unpolished stones, and with the goal of achieving substantial returns for investors in less than 24 months.
Why did Quantumrock launch Rough Gemstone I?
Our mission with Rough Gemstone I is driven by a compelling blend of factors.
Ancient Asset Class
Gemstones have perpetually captivated humanity for centuries, thanks to their enduring allure, intrinsic worth, and inherent exclusivity.
Historically Compelling Returns
Certain gemstones, particularly those with limited availability, have additionally demonstrated sustained appreciation in value.
Store of Value
Particularly, high-quality gemstones, especially those that are rare and coveted, have historically proven to be a resilient store of value, effectively serving as a potential tool against the erosive forces of inflation and volatile currency markets.
Excellent Market Outlook
The gemstone market is poised to continue its upward trajectory in the coming years, making gemstones a compelling asset for diversified portfolios.
However, entering the gemstone market as an investor has been a formidable challenge.
Challenging Market Access
Access to rare and superior-quality gemstones has been restricted and acquiring rough stones is virtually impossible for outside investors.
Capital & Expertise Required
Also. the participation in the gemstone market necessitates substantial capital and a well-established network.
While gemstones present an appealing investment opportunity, they demand profound expertise in gemology and the market to mitigate quality-related risks and render them suitable for professional investors.
Lack of Investment Options
Until now, there has been a notable absence of investment products that successfully surmount the entry barriers and make gemstones an accessible and investable asset class.
Quantumrock is making this opportunity investable for the first time.
First Listed Professional Gemstone Investment Product
Professional investors can participate in Rough Gemstone 1 through our Luxembourg-issued Secured Certificates.
The securities are listed on the Euro MTF Market of the Luxembourg stock exchange making them the first listed professional gemstone investment product. Alternatively, eligible investors can subscribe to the Certificates through a private placement directly.
Certificate Target Size
Quantumrock is in the process of launching a series of gemstone investment products, with the first one, Rough Gemstone I, now in the market. This initial offering has a target size of $175 million and should pique the interest of professional investors, family offices, and high-net-worth individuals alike.
A notable aspect of this product is that 70% of its total size has already been subscribed by the seed investor and Quantumrock itself who holds more than $9 million in the product. Professional investors can invest in Rough Gemstone I through our listed Certificates.
The Market for Polished Gemstones
The polished gemstone market continues its exciting trajectory of rapid expansion, projected to achieve an impressive compound annual growth rate of 5.6% from 2023 to 2033. This growth rate outpaces the already remarkable 4.1% recorded between 2018 and 2022, and as a result, the market is anticipated to reach a substantial size of $56 billion in 2033.
Market Size by 2033
Our exceptional stock of gemstones consists of highly sought-after gemstone types, namely Alexandrite and Emerald. These gems are renowned for their exquisite beauty and rarity, making them some of the most coveted gemstones in the market.
Alexandrite, an exceedingly rare and captivating gemstone, enthrals with its extraordinary colour-changing properties, displaying a vibrant green hue in natural daylight and transforming into a rich red under incandescent light.
Its scarcity and unique optical phenomenon make it highly treasured by collectors and gemstone enthusiasts, presenting a compelling investment opportunity.
Emerald, renowned for its intense and vibrant green colour, exudes an air of luxury and elegance. Emeralds symbolise the exquisite beauty of nature and have adorned the jewellery of royalty and the elite for centuries.
With its rich history and timeless appeal, Emerald continues to captivate people around the world. Its rarity and enduring popularity contribute to its investment value, making it a highly desirable gemstone for investors seeking both beauty and potential returns.
Alexandrite, an exceedingly rare and captivating gemstone, enthrals with its extraordinary colour-changing properties, displaying a vibrant green hue in natural daylight and transforming into a rich red under incandescent light. Its scarcity and unique optical phenomenon make it highly treasured by collectors and gemstone enthusiasts, presenting a compelling investment opportunity.
Emerald, renowned for its intense and vibrant green colour, exudes an air of luxury and elegance. Emeralds symbolise the exquisite beauty of nature and have adorned the jewellery of royalty and the elite for centuries. With its rich history and timeless appeal, Emerald continues to captivate people around the world. Its rarity and enduring popularity contribute to its investment value, making it a highly desirable gemstone for investors seeking both beauty and potential returns.
The market for coloured gemstones typically exhibits a favourable long-term trajectory, driven by their high desirability which can be attributed to several key factors:
Coloured gemstones, by nature, are generally scarcer than diamonds, enhancing their allure to collectors and enthusiasts.
In an era where sustainability holds increasing importance, natural gemstones represent a more eco-conscious choice when compared to their synthetic counterparts. Moreover, their extraction processes tend to be more environmentally sustainable than those associated with diamonds, further bolstering their appeal.
3. Emerging Market Demand
The growing economic strength of emerging markets has spurred heightened demand for jewellery, including coloured gemstones, expanding the market’s scope.
4. Investment Potential
Coloured gemstones have caught the eye of investors seeking alternative asset classes, contributing to market stability.
5. Premium Prices
Of particular note is also the current trend of major luxury conglomerates willing to pay premium prices for coloured gemstones due to their access to a substantial buyer base. Factors such as global market reach, advanced technical and creative capabilities, price stability, and a rising number of high-net-worth individuals support this approach, at least in the short term.
Rough Gemstone I's Stock of Rough Gemstones
Proven Origin and Provenance
The stock of rough gemstones with which Rough Gemstone I was seed funded was sourced exclusively from government-controlled mines in Brazil in Goias and Bahia.
There is a complete paper trail for the stock of gemstones, meticulously documenting its journey from the mine to the current beneficial owner. These records are maintained in accordance with all relevant legal, customs, and tax requirements and detail all purchasing transactions. To ensure authenticity and compliance all documentation has been thoroughly checked and verified by the auditing firm BDO.
AML and ESG Compliance
Brazil is a full member of the Financial Action Task Force (FATF/GAFI), an intergovernmental body dedicated to developing a global strategy against money laundering, terrorist financing, and the financing of weapons of mass destruction (AML/CFT). Brazil’s commitment to combating these illicit activities is reflected in its stringent regulations governing the mining sector.
The entire stock of gemstones originates from registered and government-controlled mines, ensuring full compliance with the current regulatory policies of Brazil’s National Mining Agency (ANM). Compared to other international sources of gemstones, Brazil sets an exemplary standard in terms of Anti-Money Laundering and Environmental, Social, and Governance (ESG) practices.
The auditing firm BDO and Caroline Mueller, a certified appraiser, have assessed and verified the stock of gemstones’ origin, authenticity, quality, and carat weight.
The rigorous process included analyses of the physical stones at the current storage facility in São Paulo. On the basis of their substantial assessment, BDO & Mrs. Mueller, as contracted by quantumrock, have prepared a comprehensive report confirming the authenticity, and lot qualities and weights of the stock of rough gemstones.
Labgems, one of Brazil´s most reputable gemstone valuation companies, has prudently appraised the estimated value of the gemstone stock. All reports are available in our digital data room.
Our level of diligence sets our stock of gemstones apart and ensures that our own compliance policies allign with our investors.
The rough gemstones are stored in specialised high-security vaults in São Paulo in batches of 1 kg, and have been prepared for processing. The polished stones are planned to be stored in a high-security facility in Luxembourg or Switzerland. Larger investors can asses the stock of rough gemstones themselves at their current storage location in São Paulo.
To handle the processing and beneficiation of the gemstones, we have partnered with South Capital, a renowned mining and refining operation based in Brazil. With their breadth of expertise and commitment to quality, they are well equipped to execute this crucial step in the value creation process.
A third-party agreement is additionally in place to support the realisation of the projected quality and quantity for the polished stones as detailed in the BDO assessment.
The sales process of the polished gemstones already commences during the polishing of the gemstone batches. Polished gemstones are sold to various buyers, including wholesalers, brokers, jewellery brands and producers, as well as investors and collectors. Additionally, larger gemstones or whole batches can be auctioned off.
To broaden our distribution channels and cater to discerning investors, we are in the process of establishing a dedicated investment compartment focusing on cut & polished gemstones.
Photos of physical stone storage in São Paulo
Gemstone Value Creation Process
The gemstone market exhibits outstanding potential for investors. Especially the value creation process from rough to polished gemstones which are sold at wholesale prices is highly compelling.
The process of polishing rough gemstones can unlock significant value multiples. According to experts the increase in value ranges between two and five times the worth of the unpolished gemstones depending on the pricing level.
Rough Gemstone I focuses on selling the polished gemstones at wholesale prices to ensure predictability and timely liquidation of the entire stock.
Wholesale prices can be estimated relatively accurately using industry-standard pricing guides like GemGuide, a bi-monthly publication by Gem world International used since the 1980s for valuations of gemstones in over 40 countries.
Important Disclaimer: Please be aware that the value of a polished gemstone is influenced by several key factors, such as its rarity, colour, clarity, cut, carat weight, origin, and market demand. Consequently, the value multiple estimations shown on this slide are based on expert experience, and the actual results may vary significantly. The projected increase in value is determined by two main factors: 1. the composition, qualities, and sizes of the structure’s stones and 2. the initial value of the rough gemstones.
Net Return Target p.a. of Rough Gemstone I Secured Certificates
The investment opportunity of Rough Gemstone I targets highly compelling returns for investors.
Net Return Depend On:
Value multiple achievable from sale of polished gemstones
Time required until final sale of polished gemstones
Total cost of polishing gemstones (deviations expected to be low)
Unpredictable fees and costs (expected to be low)
In the wholesale market, the sales multiples for polished gemstones typically range from 2.2 to 3.2 times the value of rough gemstones.
Assuming an allocation of 50 million dollars in cash investments to Rough Gemstone I, the target net return range per year is 23 – 50% similar to private equity offerings.
Given the targeted duration for Rough Gemstone 1 of 24 months, this results in a total net return target range of 46 – 100%.
Important Disclaimer: All values presented on this slide are based on predictions, and the final results may vary. The value of a polished gemstone is influenced by numerous key factors, including its rarity, colour, clarity, cut, carat weight, origin, market demand, and market price fluctuations. It is crucial to note that the estimations displayed here are derived from expert experience, but the actual results may vary significantly. Additionally, any net return indications provided do not account for investor-specific deductions, such as taxes due. Therefore, we strongly advise considering these factors before making any investment decisions based on this information.
Dr. Stephan Hauska
Head of Sales
+49 89 215 283 341