A London-based investor plans to launch an art fund in India this year, joining several domestic players who are raising money hoping art prices will continue to soar. will continue to soar.
The Fine Art Fund, which already operates in the UK, the US and China, has set a target goal of $20 million (Rs85 crore) for India and plans to open in April or May, said Philip Hoffman, chief executive of Fine Art Management Service Ltd, which manages the funds.
“The fund will only invest in Indian art,” Hoff mansaid in a telephone interview from Geneva. “The plan is to invest over a period of time, and we are only investing in art where we see real value.”
Hoffman, formerly a finance director at Christie’s auction house, said the fund will function as a joint venture with an Indian gallery or collector, but refused to disclose names.
In India, however, Hoffman is unlikely to pick the works of artists fetching high prices. “They are overhyped,” he said.
Price tags on Indian art have skyrocketed in recent years. Paintings selling for more than Rs1 crore have become common at auctions; at the Osian’s auction this week, the highest bidder took home a work for nearly Rs6 crore.
“Some artists have huge records. We will not be investing in them, but we will look at opportunities in long-term investments,” Hoffman said. “There are many artists whose prices will go down and we will be careful.”
Three years ago, Hoffman launched the first in a series of funds in the US. He opened two more funds in London and China last year. Fine Art Management Service is based in Delaware, in the US, but operates from London.
Its investments include Renaissance pieces up to 21st century modern works, with about $2-3 million (Rs8.8-13 2 crore) bought and sold every month. Investors’ average returns after sale showed a 58% increase in the Western art category, Hoffman said. He won’t disclose how many investors he has, but said each puts in between $10 million and $150 million.
The Indian fund, he says, will target15-20% returns.
India’s domestic art fund market remains in nascent stages but has grown more competitive, with high-brow auction houses such as Osian’s to Bollywood actors such as Sridevi getting involved in fund creation and portfolio selection.
Osian’s launched India’s largest fund by raising Rs100 crore, while Copal Art Ltd opened two separate funds of Rs10 crore each. Banks also have joined the fray.
The Kotak Mahindra Bank offered a Rs25 crore fund last year. Titled the India Art Fund , it has nearly 80 investors and has appointed two art evaluators—Pheroza Godrej of Mumbai’s Cymroza Art Gallery and Saryu Doshi, former director of the National Gallery of Modern Art in Delhi.
“Because Indian contemporary art is receiving a lot of attention, we are offering this service to high-net-worth individuals who are already investing in private equity or debt,” said Nandan Maluste, senior vice-president of Kotak Mahindra Capital in Mumbai.
In the US, art funds took off about three years ago, and then cooled down when fund managers couldn’t raise enough money or interest in them.
Art as investment creates a highly “inefficient marketplace,” US-based art economist David Kusin said in a telephone interview with Mint.
“There is enough data from a statistical point to understand art as a commodity and how it works in the global marketplace,” he said. “But we have no evidence to point how the funds work.”