Osian Art Fund, the charismatic Neville Tuli’s brainchild, has come under a lot of pressure as it struggles to return capital to investors and fend off lawsuits from auction houses. Forbes India takes the opportunity to delve deeply into the tale of Tuli, his rise and dance along the precipice, as he borrowed money from a Dubai hedge fund, Abraaj and tries to stay one step ahead of a liquidity crunch:
In June 2006, just when the stock market was down but the art market peaked, Neville Tuli announced the launch of an art fund amid an economic boom. All markets were awash with liquidity. The art market was estimated to be growing at nearly 100 per cent. A clutch of banks led by BNP Paribas and ABN Amro referred their wealthy clients to buy units in Osian’s Art Fund and in return got hefty fees of up to 20 per cent in some transactions, according to a person who was involved with the issue. The banks together earned nearly Rs. 5.5 crore. The fund raised an unprecedented Rs. 102 crore. […]
Initially, Osian’s art fund appeared to be a thumping success with its net asset value (NAV) racing to Rs. 121 in February 2007, barely six months after closure. Its total corpus was invested in 146 artists, the top 20 of whom included masters such as V.S. Gaitonde, F.N. Souza, S.H. Raza and M.F. Husain. The first disclosure report said the 20 comprised three-fourths of the value of the Fund. The NAV of the Fund’s units rose to Rs. 138 within two years of launch before falling to Rs. 128 in January 2009. By the time the scheme matured in July, it had fallen to Rs. 112. […]
Tuli made another fatal mistake. He bid aggressively and paid top dollar for the art he wanted. In hindsight, it is clear he almost always overpaid. “Neville Tuli got carried away and paid many times more than the then current market values for artists like Akbar Padamsee, Gaitonde, Husain, Jogen, etc.,” says art consultant Bijay Anand. “You can, as a human being, make some errors in judgement sometimes [but] what are you trying to prove if you consistently pay multiples of market valuations for particular artists. Don’t you have a responsibility to the investors who have invested their hard earned monies with you?”
Osain Art Fund: The Broken Paddle (Forbes India)
