Funds signal maturing of Indian art investment

Indian art is climbing investment heights - a good news for painters, sculptors and other artists, reports Suman Layak.

Indian art is taking off, not just by getting global recognition and prices, but also by emerging as an attractive asset class for Indian investors, as the nation's economy grows at eight per cent and throws up millionaires who open up to celebrate social mobility and growing wealth.

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That is good news for painters, sculptors and other artists, as more investors will easily mean better prices and also for  intermediaries who tell people what to buy, and play a role in putting financial numbers on works not so easy to value.

Next Wednesday, on November 15, India’s third art fund, the Crayon Capital Art Fund, will kick off, hoping to raise Rs 40 crore and after that, Yatra will launch its second fund in the first week of December with a targeted corpus of almost Rs 100 crore.

In a sign of changing times, leading art dealer Ashish Balram Nagpal released full-page ads in newspapers on Friday, inviting Indians to invest in art, and breaking the mould of discreet dealers content to rely on elegantly small ads or better still, old-fashioned word-of-mouth reputation.

“We advise people to invest in art after they have invested in equities and similar instruments as a hedge, because when a downturn strikes the economy, art prices  do not fall as much as equities do," said Nipun Mehta of Unitis Tower Wealth Advisors, which helps sell the Yatra funds.

Nagpal said anyone buying art is also thinking of the investment value of that piece of work. “Only the Maharajas would have bought art just for its beauty. All businessmen who buy today are combining beauty with business," he said.

Figures cited by the new middlemen show galloping growth. “Total Indian art sold in international auctions in 2003 was at $4 million. In 2006 it is likely to touch $150 million. If we add non-auction sales, the figure would reach $300 million for this year," said Amit Vadhera of Crayon.

“In September 2006 alone, international auctions have sold Indian art worth $17.8 million,” he said. The average price  has risen from $12,000 to $80,000.

“I feel Indian art is coming of age finally. The price our art used to fetch in global markets earlier was petty cash. What is happening now should have happened five years back," Nagpal said.

The first Yatra Art fund was launched in September 2005. V. Sanjay Kumar, one of the trustees of the fund, said returns in the first year worked out to 38.5 percent.

Kumar said Yatra’s second fund will be looking at second rung of painters and is likely to be ten times bigger than the first one. It will also put 20 per cent of the money in other emerging, especially China.

Such deals could be two- way: A Chinese collector picked up an F.N. Souza painting for $1.36 million at the last auction held by Christie's.

Neville Tuli’s Osian launched India’s second art fund earlier this year. The minimum investment in Yatra’s first fund was Rs 20 lakh. The second fund will have a minimum investment size of Rs 10 lakh, but will be offered in the same manner to high-net worth investors, only by invitation.

This fund, which would be open for two weeks in December, is expected to rope in 500 to 750 investors.

Individuals who cannot get into large funds still have galleries to choose from. The big ones are for the real rich.

Email Suman Layak: suman.layak@hindustantimes.com