Saturday, January 30, 2010

Osian's Art Fund: The Broken Paddle

Flamboyance and grandeur marked out Neville Tuli as India’s best-known art messiah. Today the collapse of his fund has revealed he got it all wrong
by Dinesh Narayanan, Elizabeth Flock, Shloka Nath | Jan 29, 2010

Read it at Forbes

No, it was not the money that I valued —what I wanted was to make all this mob of Heintzes, hotel proprietors, and fine ladies of Baden talk about me, recount my story, wonder at me, extol my doings, and worship my winnings.”
–Fyodor Dostoevsky in The Gambler

If the 19th Century Russian author were to live and search for a novel idea today, he could try telling the story of Neville Tuli, who spent 18 years gambling on horses at Laddrokes in London, returned to his roots in India where he became the best-known spokesman of the country’s art and launched the world’s largest art fund. The story would, of course, turn melancholic, detailing how he fell from glory with the plunge in the art market, struggled to pay his investors and stared at the risk of losing all that
he created.

One good place to start the plot would be the Mumbai office of ABN Amro Bank. A bank executive pays a visit to the office of Tuli’s Osian’s Connoisseurs of Art (Osian’s) almost every other day to recover money that the firm owes several wealthy clients of the bank who invested in an art fund sponsored by it. The dues are more than Rs. 40 crore. The bank has so far managed to extract some of that money. A lot remains. (ABN Amro declined to discuss the case with Forbes India but said it will review any client complaint and investigate).

Neville Tuli, the flamboyant chairman and managing director of Osian’s, needed about Rs. 115 crore to repay investors in Osian’s Art Fund – Scheme Contemporary 1, when the three-year scheme matured in July 2009. Unfortunately, a global recession froze the art market, landing Osian’s in a liquidity crisis and left the close-ended art fund marooned with unsold inventory and a cash shortage just around that time.

Soon, word spread that Tuli’s art fund wasn’t able to pay off investors at its close. This set off a reaction among the art fraternity, beating down the prices of the works of marquee names such as M.F. Husain and F.N.Souza in the fund’s portfolio. Surely, Tuli has told banks such as ABN Amro and BNP Paribas that referred their clients to the fund that it was only a “delay not default” caused by the art market reversal. But he

India Asia Arab Art Fund: Cracks in the Framework

Neville Tuli’s India Asia Arab Art Fund proved a non-starter but has managed to land him in trouble with his investor, private equity firm Abraaj Capital
by Elizabeth Flock | Jan 29, 2010

Read it at Forbes

Sometimes even an exit route can become an unexpected trap. When Neville Tuli conceived the India Asia Arab Art Fund (IAAF), he also considered it as a potential rescuer of the art fund sponsored by his flagship Osian’s Connoisseurs of Art. Tuli told Forbes India that as a last resort, IAAF could buy modern and contemporary art from Osian’s Art Fund, of course, at an arm’s length pricing and valued by third parties.

IAAF, however, never took off and the elaborate set up that Tuli created for it, landed him in trouble with one of his most high-profile investors, the Dubai-based private equity firm Abraaj Capital.

In a claim issued October 5, 2009, Abraaj Investment Management Limited, an associate company of Abraaj Capital, filed a lawsuit againt Bregawn Jersey Limited in the Queen’s Bench Division of the High Court in the UK for more than $23 million.

Bregawn Jersey Limited is Neville Tuli’s offshore company, based in the Jersey Isles that was acting as a purchasing agent for Abraaj.

In March 2008, Tuli wanted a loan to buy art for IAAF, which would specialise in investing in Indian, Asian and Arabian art. Through several contractual agreements, Abraaj advanced Tuli a sum of $1 million to purchase works of art for the Fund. Tuli said he would repay the loan on or before August 1, 2008, with an extension of a maximum of 30 days. The total sum to be repaid was $1.2 million.

In June of that year, Tuli and Abraaj signed a Purchasing Agency Agreement that increased Abraaj’s loan to Tuli quite a bit. The new loan was again for purchasing works of art on behalf of Abraaj for sale to the IAAF. The purchase price by Tuli was not to be more than

Monday, January 4, 2010

Karambir Kang: The Stoic

Uncomplicated. Jokester. Turn-around guy. Saviour. Survivor.
by Elizabeth Flock | Dec 29, 2009

Read it at Forbes

Karambir wasn’t supposed to be his name.

At 22, Kanwaljit Kang was married and pregnant. One night, she had a dream. A saint opened the Sikh holy book and said, “Name your baby, a son, Dusht Daman.” Kanwaljit only laughed. Such a hard name for a child, she thought. The name meant “Destroyer of demons”.

The saint was right. A boy was born. For eight months, he went without a name. Finally, Kanwaljit and her husband Jagtar went to a nearby saint to ask for another name. A name not so rough. But the saint said the name should stay. Still, Kanwaljit resisted it. No, we must give him something more modern, she thought. A softer name. They settled on Karambir. It meant, “A person who does brave deeds”.

Now, Kanwaljit, 61, cries when she talks about her son’s name. She wipes her eyes with her dupatta continuously. Her makeup smears into little rain clouds around her eyes.

“If I had given him the name I was supposed to, maybe he could have killed those terrorists that day,” she says. She cries harder.

On November 26, 2008, her son did not kill terrorists. But