Rising prices of Indian paintings have prompted Osian to plan an art fund. In this fund, you can hold a stake in a Raza, a Hussain or a Souza for Rs 10 lakh (Rs 1 million). And you may end up with at least 40 per cent returns on the stake.
Neville Tuli, chairman of Osian's, promises this to every investor in the to-be launched The Osian's Art Fund. This is the first time globally that an auction house has come out with an investment fund.
"Within five years, the Indian art market's turnover has expanded manifold from Rs 5 crore (Rs 50 million) to Rs 2,000 crore (Rs2 billion). Along with China and Russia, India has the biggest art market in the developing world. If you get anything less than 35-40 per cent returns from the fund, it will be a failure for us," he says.
The Rs 80-100 crore (Rs 800 million to Rs 1 billion) art fund will invest in contemporary work of top 250 artists from the Indian subcontinent and has a three-year lock-in period. Though "everybody is welcome," the close-ended fund will initially focus on the 650 well-heeled clients of Osian's.
With a minimum Rs 10 lakh investment, one can buy units of Rs 100 each and the profits will be shared 70:30 between the investors and the fund manager.
The management fee will be three per cent. "Within five years, we will have anything from Rs 2,500 crore (Rs 25 billion) to Rs 3,000 crore (Rs 30 billion) under our management," states Tuli.
He reinforces that this is not a mutual fund and does not come under the purview of Securities and Exchange Board of India.
The Art Fund will open by the end of April and close after a month. The hurdle rate is 15 per cent and the net asset value will be issued at quarterly basis.
"Our artistic heritage of 5,500 years has remained in the black economy. The fund will change the patronage and financial structure of the Indian art," says Tuli.
Among its long-term plans, the auction house will also launch an off-shore fund open to international clients. It will invest in varied art forms including film memorabilia, books photographs, posters and maps.
"Within three years, the 200 million middle-class will invest in the cultural artefacts of the country for as less than Rs 1,000. Imagine holding a stake in the first ever poster of Mughal-e-Azam!" exclaims Tuli.
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