Private Equity India Art Fund


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Private equity fund investing in art designed as part of course on private equity

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Private Equity India Art Fund

  2. 2. Contents  METRIC Global  Objectives  Investment Considerations  Investment Paradigm  Art Market - Destination  Investment Theme  Investment Allocation  Investment Criteria  Business Segments  Fund Subscription details MAPPING VALUE GLOBALLY !!
  3. 3. METRIC GLOBAL  Is a fast growing Investment advisory and Boutique Private Equity group  It was started in 2004 by four SPJCM Grads  Operates from 5 Locations: Mumbai, Singapore, Dubai, Shanghai, New York  Current Assets under Management US $500 million  Current Funds are divided into three family of Funds:  METRIC India Real Estate Fund – US $175 million  METRIC BRIC Special Situation Fund – US $150 million  METRIC Emerging Market Alternate Asset Fund – US $125 million MAPPING VALUE GLOBALLY !!
  4. 4. Past Performance Past Fund Performance 18% MEMAAF 48% 27% 2007 Funds 15% MBSSF 30% 2006 25% 2005 40% MIREF 70% 45% Returns MAPPING VALUE GLOBALLY !!
  5. 5. METRIC INDIA ART FUND (MIAF): OBJECTIVE  The fund aims to build & finance the Art Industry as a whole  Investment in publicly traded companies associated with the Industry  Investment in Museums, Art Galleries & Private assets promising high growth  Primary objective is to bring transparency in the Investments in ART  Bridging the Gap of Financial markets & Art as an asset class  It would operate both as investor in works of Art  And as a Structured Fund Manager investing in the Sector  Emphasis would be to take the advantage of the untapped Art market MAPPING VALUE GLOBALLY !!
  6. 6. Why Art Fund ? Diversification of your Portfolio Expected return of 20% or higher “Second beauty of Art is its low correlation to most financial assets. This means investment in Art can reduce fluctuations in a Client’s Portfolio” The Wall street journal 19th august 2006 MAPPING VALUE GLOBALLY !!
  7. 7. The Art Market………Next Destination  In 2006, the assets of HNI’s grew by 11.4% to USD 37.2 trillion, showing the first double-digit growth in seven years  The number of HNI’s in the world increased by 8.3% to 9.5 million, and the number of ultra-HNI’s grew by 11.3% to 94,970. The largest growth •Requirements of Different of HNI population occurred in Asset classes for Portfolio  Singapore(21.2%) Diversification  India (20.5%)  Russia (15.5%) •BRIC countries are  the Middle East (11.9%) becoming more active in  Latin America (10.2%) the Art market thus  China (7.8%). (Merrill Lynch / Capgemini World Wealth Report 2007) providing more liquidity in the sector Christie's & Sotherby's Total annual auction sales •Increase disposable 2007 11.1 income in the hands of people to economic boom YEARS 2006 8.2 SALES can be leveraged upon. 2005 6 SALES MAPPING VALUE GLOBALLY !!
  9. 9. India Art funds • Osian’s Art Fund – INR 1000 million • Yatra Art Fund – INR 110 million • Crayon Capital Art Fund – INR 400 million • India Fine Art fund – INR 1000 million • Blue Chip Art Fund – INR 1250 million MAPPING VALUE GLOBALLY !!
  10. 10. Why another Art Fund ? MAPPING VALUE GLOBALLY !!
  11. 11. From Investing in Art Investment in Art Industry MAPPING VALUE GLOBALLY !!
  12. 12. INVESTMENT PARADIGM • Creating, collecting & investing in art is an increasingly global activity with open access • Significant returns from Art assets have spurred Art Investments as a separate asset class in the Portfolio • Rapid emerging business in high growth segment of the global economy • The business is also serviced by other business like media, IT, Finance, Manufacturing, Specialty Retail, Logistics and Security together forming ‘Art Industry’ • Emergence of Art houses, galleries, & Auction houses have bought transparency in the deal size. MAPPING VALUE GLOBALLY !!
  13. 13. INVESTMENT CONSIDERATIONS • The investment of significant levels of new money in the global art market results in a preparing ground for businesses that serve stakeholders, art investment, and promotion processes worldwide • Existing non-artisan corporate players have the first mover advantage as they shape and develop the emerging Art Industry • The economic benefits from value appreciation are distributed in favor of intermediaries and other art businesses (and thus tend to be limited for artists and art buyers) • Globalization of the Art Industry is inevitable and is fuelled by ease of transport / spread of artistic concepts, global nature of all industries serving high net worth individuals (consuming the best rather than local) and lack of regulation around the world • However, the existing presence of art market is mainly reflected today in the auction and art fair segments of the art industry, leaving significant opportunity for further consolidation MAPPING VALUE GLOBALLY !!
  14. 14. METRIC INDIA ART FUND (MIAF) INVESTMENT THEME Public Equity – 30% Private Equity – 60% •Equity Listed in Bourses •High Growth Assets •Ancillary Businesses •Personal Arts •Auction Houses Liquid Funds – 10% •Art Galleries •Treasury Bonds •Historical Monuments •Liquid Funds •Term Funds MAPPING VALUE GLOBALLY !!
  15. 15. Art Industry – Private Equity •Auction Houses •Museums Business •Galleries •Online Stores •Specialty Stores •Security Services •Software IT (Art oriented) Services •Supply Chain Management •Financial Services •Art Magazines •Event Management firms Media •Value services firms •Media Channels MAPPING VALUE GLOBALLY !!
  16. 16. Investment Criteria • Proven business model, scale-up potential • With strong international expansion potential • Significant and quantifiable barriers to entry • Strong management team and a clear path of succession, including retention of exiting owners at the board level in active and clear management strategies • Customary protection of minority shareholders rights, right of first refusal, drag along, tag along and other customary provisions • Active board participation granted to METRIC Team, ongoing assistance with finance, M&A, international business development and investor relations functions • Clear exit strategy over 5-year time horizon, including more than one option and allowing for over 25% in annualized IRR • Deal size in excess of INR 1 million; for deals above INR 200 million in size co-investors would be invited; • NO LEVERAGING in the Fund MAPPING VALUE GLOBALLY !!
  17. 17. Investment Criteria – Segment Wise •Auction Houses •Later Stage companies •Museums •Scalable Business Model Business •Galleries •Improving Cash flows •Online Stores •4-5 years of track record •Specialty Stores •International expansion •Security Services •Later Stage companies •Software IT (Art oriented •Broader resource of Product Services •Supply Chain Management •Technologically upgraded •Financial Services •3-5 years of Track record •Art Magazines •Development Stage •Event Management firms •Min net worth of INR 10 mn Media •Value services firms •Management Dependent •Media Channels •Metros (MUM & DEL) MAPPING VALUE GLOBALLY !!
  18. 18. EXIT STRATEGY •Through Auctions Private Equity •Brokered Deals •Private Placement •International Art Exhibitions •IPO •Private Placement Public Equity •Embedded option MAPPING VALUE GLOBALLY !!
  19. 19. Fund Management Team………………. •Sajeev Rao •Preet Sabharwal •MBA (IB) •MBA (IB) •4 yrs with METRIC •4 yrs with METRIC •Head of Research •Head of PE Division •Founder Partner •Founder Partner •Involved in all Funds •Involved in all Funds •Hardik Doshi •Navin Bafna •MBA (IB) •MBA (IB) •4 yrs with METRIC •4 yrs with METRIC •Chief Invest officer •Head of Cap Markets •Founder Partner •Founder Partner •Involved in all Funds •Involved in all Funds MAPPING VALUE GLOBALLY !!
  20. 20. Art Industry Experts – Advisory Board • V.S Rajesh Balasubramanium Worked with Jehangir Art Gallery, Mumbai for 15 years • Dr. Vijay Dander Worked with London Museum, Research for 10 yrs • Dr. Ram Kumar Dhongra Renowned artist in Indian & International Art Exhibitions • Padma Jalan Owner of Indo-US Art Mall, New York • Radha Kishan Agarwal Chief representative officer India Art & Craft association in EU from 1994 – 2007 • Syed Rehman Khan Director of Middle-east Art foundation MAPPING VALUE GLOBALLY !!
  21. 21. Deals In Pipeline & Origination •Advisory Board together with Management team is in process of negotiations with reputed names (artists) in the Industry •We are already in the Final stages of a deal with a Contemporary Art Stockist • We are in currently in negotiation stage with two of the Biggest Event Managers in the Industry • Prior experience in MEMAAF • Industry contacts of the Advisory Board • Personal extensive Relationships
  22. 22. Subscription Details •Fund Managers: METRIC GLOBAL •Opening Date: 1st August 2008 •Asset Class: Art Sector •Closing Date: 30 September 2008 •Geography – •Minimum Subscription: Investment: Global ROI: INR 100000 Sales: India, NRI’s NRI: USD 10000 •Corpus: •Subscription Fee: 5% US $ 100 million •Management Fee: 2% INR 4 billion (approx) •Term: 10 yrs •Hurdle Rate – 20% •Move out Periods: •Sponsor Contribution: 20% •30th JUNE 2012 / 2016 / 2018 MAPPING VALUE GLOBALLY !!
  23. 23. Risk Factors • Commissions in the BUY & SELL is very high (goes up to 20%) • Geographical Bias • Industry is prone to Economic & Financial unstability • Real Interest rates & Inflations • Duplication & Fraud Art forgeries • Exit may be longer than estimated • Acquisition, maintenance & trading costs are too high • There is no dividend or rental stream to offset storage and insurance costs MAPPING VALUE GLOBALLY !!
  25. 25. Thank You !!! MAPPING VALUE GLOBALLY !!