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Mentoring The Arts

Monday, March 14, 2016

Rishiraj Sethi, Director, Aura Art eConnect Pvt Ltd

Mentorship always has equal benefit for the Mentor then the Mentee, believes Rishiraj, after being on both sides of the spectrum; more so after a chance mentorship of select ISB students changed his life. Rishiraj was assisting Realty Developers raise Private Equity funding, as part of the Investment Banking team at Ernst & Young in 2007, when a bunch of students from ISB Hyderabad reached out to him to do a Project on Real Estate.  When some of the students, particularly Karuna Jain and Himanshu Gulliani, became aware of Rishiraj's interest in Fine Art, they requested to change the topic of research to "Wealth Creation through Art", given that may of their friends were already covering real estate.  This started an interesting journey that is still continuing...

Rishiraj has always taken keen interest in researching various investment ideas, ranging from listed equity, real estate, gold and more recently early stage investing and fine art.  Having completed Chartered Accountancy in 2000, he was keen to pursue the Chartered Financial Analyst (CFA) Program offered by CFA Institute, US as early as 2003.  During his college days, Rishiraj authored a series of articles on Technical Analysis for finance weekly, over a period of one and a half years.  Over time, Rishiraj had plans to set up a Wealth Management business that would guide clients in allocating wealth over alternate assets... till the art bug hit him too.. his father and brother were already researching and collecting art for over a decade..

His 11 year stint at Arthur Andersen / Ernst & Young (1997-2008) honed his professional capabilities, besides skills in Taxation, Structuring and Investment Banking, enabling him to take a holistic view of any Transaction / Business.  His sector focus revolved significantly around Healthcare, Pharma, Real Estate and ecommerce, with Healthcare and ecommerce continuing to be areas of significant interest, in addition to Art.

Roped into the Core Team of Aura Art in 2006 by the family, Rishiraj went onto co-promote Aura Art Development Pvt Ltd in 2008, which now serves as the Holding Company, having spun off a subsidiary Aura Art eConnect Pvt Ltd in 2015.  As a Group, Aura Art is well positioned to become India’s leading fully-integrated Art Promotion House.  In addition to guiding HNIs and Wealth Managers in building Art Collections, Rishiraj also works closely with Realty Developers and Space Designers to provide Integrated Art Solutions including commissioned sculptures and installations, besides working with Collectors and Corporates to provide Art Infrastructure Solutions.

In conversation with ADC this Art Entrepreneur explains the growing business of Art, both as a business and as an investment. His views...

What drives you?
I am driven by the sole purpose of creating a world class institution that furthers the cause of Indian Art.  I believe that as a whole Indian Art is highly under-represented and there are significant gaps in the Art ecosystem, which need to be systematically addressed, if we are to ready ourselves for the significant expansion that lies ahead.  The Indian Art Industry understandably has been confined to a very small cross section of the elite of Indian society, that too only in the prominent metros – however, there is increasing interest to participate by many others, whether as future collectors or simply consumers of art.  On the other side, there are many artists with great potential, who have not been adequate promoted domestically, let alone globally.  Also, there are glaring gaps in art infrastructure in the country.  Some of these will take a lifetime to address, so clearly there is a lot to do on all fronts.

How big is the potential for a business like yours? Any major customers that you now cater to? What kind of numbers do you expect from a business like yours? Any statistics to compare with international standards?
Global studies establish art an alternate asset class, which has withstood the test of time.  Some of the wealthiest families in the world, foreign corporations, banks and heads of private equity funds have allocated a significant part of their wealth into art, over long periods of time, with encouraging results, inspiring even some pension funds in Britain to follow suit.  The Rothschild family started building its art collection in 1850 and has been investing actively ever since. Baron Eric de Rothschild, Chairman, Rothschild Private Banking & Trust recommends keeping 1/3rd of your assets in equities, 1/3rd in real estate and 1/3rd in art.  This trend is likely to catch up even faster in the Indian context, with the wealth creation cycle only gaining momentum and an ever increasing interest for “investments of passion”.  In this, we can yet again draw inspiration from our neighbour, hitherto known for its manufacturing prowess, which is also now emerging as the world leader in this creative field as well.  China has recently overtaken the US as the world's biggest market for art and antiques ending decades of American domination.  China's share of the global art market rose from 8% in 2006 to 30% in 2011, pushing the United States, with 29%, into second place.  India still lags behind at less than 1% of the global art market.

To take into perspective some relative values, even after the top end Indian artists have grown tremendously in value over the last decade, the highest priced Indian painting (apprx USD 4 million for a Gaitonde) is around 1.33% of the value of the highest priced International painting (USD 300 million for a Paul Gauguin).  The entire Indian art market is estimated to be around USD 250-300 million – just about the value of one painting by an international artist and less than 1% of the USD 60+ billion global art market.  This despite the fact that other asset values in India (realty, equity etc) compare favorably with the developed markets.

All this clearly suggests that there is significant headroom for Indian art market to grow as we see more and more Indian collectors emerging as well as global collectors adding Indian art to their collections.  The burgeoning growth of the luxury segment in India is another proxy to the impending growth of the art market.  

How do you plan to scale up; raise funds through seed or venture capital or simply grow the old fashioned way through rising turnovers?
Aura Art Development Pvt Ltd, which was incorporated in 2008, is still entirely held by the family (my father, brother and me).  Given the nascent stage of the industry, various dynamics at play and the numerous initiatives that we had to engage with to broad base the industry, we chose not to involve external shareholders (despite various approaches from institutional and individual investors), till such time as we had clear plans for profitable scale-up of specific verticals.  In this direction, Aura Art eConnect Pvt Ltd was spun off as a subsidiary in 2015, to house the Online Marketplace for Curated Fine Art.  We have recently raised an angel round in the subsidiary, with the assistance of Nilesh Ganjwala, CEO of Innergize Solutions Pvt Ltd, who has been a key mentor to Aura Art since its inception and an active member of the illustrious Aura Art Team.

Who would primarily be your consumer audience?
Our consumers can broadly be segregated into 3 categories - and are located across India as well as other parts of the world:
a) Evolved collectors: who have been patronising art for decades.  These collectors engage with Aura Art for filling in gaps in their collection, given that we are closely associated with some interesting artists as well as rebalancing their collections.

b) New collectors: who are now beginning their journey towards building a collection.  These collectors need an understanding of the long term benefits of collecting art as well as a strategy for building the collection over time, keeping in perspective their personal aesthetic sensibilities.

c) Consumption buyers: besides collection, there is also an increasing trend towards consuming more and better art, with home buyers, corporates, hotels and also hospitals becoming more conscious of the need to display quality art to liven the decor, besides making a statement.  Many of these buyers rely on the judgement of various influencers, including architects and interior designers.

Last but not the least, there is a growing interest in large installations and sculptures, by realty developers for their projects as well as from corporates and developers for public spaces (as branding tools as well as to impart a social message).

Where do you see yourself five years down the road?
I see Aura Art emerging as a leading Art Promotion House, which will continue to fill the gaps in the Indian Art Industry - identifying and discovering value amongst the best of Indian art, utilising every available platform to promote art, assisting art lovers in building and maintaining their collections, working closely with the design space to meet their aesthetic requirements - with an aspiration to migrate to a fully Integrated Art House.  I also see initiatives like The Art Enclave at UBM Index Fairs achieving the desired objective of connecting various art galleries and artists with the space designers and the online platform ( emerging as the leading Online Marketplace for Curated Fine Art.

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