Art as a hedge against bankruptcy? Read on
Last week, Christie’s South Kensington added $2.6 million to an earlier auction of Lehman Brothers’ art memorabilia by Christie’s New York that fetched $12.3 million in what many have described as a frenzied bid for the bankrupted company’s assets. Far from reviling the company that became a symbol of one of the largest meltdowns in history, collectors bid for the ephemera of 18th and 19th century vintage objects, antiquarian books, cutting-edge contemporary paintings, abstractions, lithographs and photographs. They did so not for the voyeuristic pleasure of owning something that hung in the beleaguered company’s offices, but because they hoped to get their hands on these treasures somewhat cheap — a hope that was, sadly for them, belied.
Back in India, in August, came news that the Rs 17,000 crore RPG Enterprises was putting its house and third generation succession plan in order. Interestingly, auditors were adding up not just the assets of the companies that would be split between the scions Harsh Goenka and Sanjiv Goenka and their wards but also the comprehensive art collection painstakingly collected over the years by Harsh Goenka that was being appraised for the purpose. Whether the collection gets split between the brothers or remains with the senior Goenka, the interesting point to note is that for the first time art has been acknowledged as a financial asset — like many, I had believed it to be Harsh Goenka’s personal collection — and its value is being taken into consideration.
Art as a corporate investment is, of course, a rarity still in India. We now have enough examples of corporate houses directly or indirectly through their promoters investing in art, yet few view them as bankable assets, though the value of such collections has probably grown manifold over the years. Among those that have occasionally tested the market are Bennett, Coleman & Co whose international auction forays over the years have seen it fetch record prices for such artists as Tyeb Mehta and M F Husain. Many of us are thoughtless enough to consider only modern and/or contemporary art as an investment, forgetting that some older companies are probably sitting on a fortune in miniature paintings, sculpture or even folk art — Ghanshyam Das Birla was one such collector.
The financial worth of groups like Taj and ITC, who have over the years so effortlessly invested in art, is probably staggering — the nod here is particularly to their hotel companies, since otherwise art purchases have been restricted to the offices of the senior-most bosses and for board rooms. The Oberoi group, on the other hand, has invested less in any worthwhile art in at least its city hotels, in contrast to the newbie Leela group where the art is somewhat more evident. Among the visible faces of collecting in corporate circles, the most substantial references are of Religare’s Malvinder Singh, HCL’s Shiv Nadar and the Rajshree group’s Rajshree Pathy, though of course there are several others who buy on a quieter or more modest scale.
The point here isn’t about who is spending how much to buy art as much as the asset-worthiness of art. Just as much as a Tag-Heuer watch, a Hugo Boss suit or a Louis Vuitton bag, a work of art adds value to a person’s — or company’s — overall perception. Art, more than almost anything apart from cars, is a guaranteed talking point and a collection of Souzas or Razas can be a terrific ice-breaker. That they add to the aesthetics of your real estate is merely further compensation.
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What companies need to take into consideration is the financial liquidity that an important art collection offers. In times of a crunch, or when it needs to mortgage assets to leverage loans, or simply needs to pull in cash, a discreet sale of art can tide over most awkward situations. Of course, in worst-case scenarios, they might actually turn into the balm that companies require to control damage. Lehman Brothers’ loss of billions of dollars may not have found enough leverage in the auction of its art assets, but had Ramalinga Raju invested in an art portfolio instead of land, it’s interesting to speculate if he might have come to less grief.
These views are personal and do not reflect those of the organisation with which the writer is associated.
