By Michael Coulson
Many corporate collections begin by buying young artists and as their value grows, their collections become impressive.
Are corporate art collections intended as an investment asset class, a way of decorating the corridors of the head office or just the chairman’s wife enjoying a position of patronage? There’s no simple answer, but whatever the motivation, the corporate sector has been a major buyer of locally produced visual art, and some companies are sitting on collections with a considerable value. Collections may not have been built up for investment purposes, but can acquire investment implications.
Take KWV, where an art collection with a reported book value of R40m (as that’s at cost, market value could easily add a nought on the end of that – after all, how many Irma Sterns or JH Pierneefs, by far the two most highly-priced South African artists, do you need to arrive at a valuation like that?) has become a key issue in the row between incumbent management and dissidents who think the company that once dominated the wine industry has become a sluggish, inefficient dinosaur showing an unacceptably low return on assets. And KWV’s collection is small beer by corporate standards.
While businesses have been buying art for a century or more, it’s really only in the past 30 to 40 years that it has been a major preoccupation. Take Sanlam, one of the oldest established collectors, with just fewer than 2 000 items, including Stern, Pierneef and no fewer than 89 Maggie Laubschers. The collection cost R10m- R11m to procure and is now insured for R148m. In December last year Sanlam held an exhibition of 40 of its leading works at the Alphen Hotel in Constantia.
Those works were valued at R35m. Few corporations are prepared to be so open about the value of their collections – or, perhaps, even know exactly what they’re worth. Absa art curator Paul Bayliss says his institution owns 20 000 works of visual art, which he claims (and who would deny it?) is the biggest collection of South African art in the world. He won’t disclose its current value, and the Sanlam collection may be a poor surrogate for the industry as it started buying way back, when a Stern may have cost 50 guineas, but the Absa collection must surely be worth R500m or more.
Add others such as Telkom, RMB, First Rand, the SABC and a host of minor collectors, and while it’s a total thumbsuck, it must be a reasonable ballpark figure that corporate South Africa collectively owns way north of R5bn worth of locally produced works. That’s a significant investment, by any standard. But though the anecdotal chairman’s wife was dismissed as a fiction by everyone I spoke to – well, they would, wouldn’t they? – it’s clear that corporate art collections have many origins.
The oldest part of the Absa collection, for instance, stems from its Volkskas constituent. As Bayliss says: “They were a retail bank. They needed art to fill the walls of their branches.”
Almost 30 years ago, his predecessor, Cecile Loedolff, started to commission then contemporary artists for the Volkskas branch network. With the various mergers and organic expansion, Absa now has a thousand “touchpoints” where it interacts with the public. It also willy-nilly acquired work from its other components – and, Bayliss adds, has never sold any.
Loedolff now consults to Sasol, whose major collection was largely initiated by former CEO Johannes Stegmann. Coincidentally, Loedolff says, it was Volkskas that inspired Stegmann: he was a non-executive director of the bank, and his visits to its head office, where he admired the work on its walls, convinced him that Sasol should follow suit.
Loedolff sees nothing wrong with an art collection starting off as glorified wallpaper.
“Research has shown that staff morale and productivity are higher in offices with attractive art on the walls than if they’re just bare grey spaces. Staff even become more innovative. But as a collection develops, its role changes. It becomes a way of enhancing a company’s brand; if it’s exposed to customers and the broader public, it shows that a company realises it has an obligation to develop a society’s culture.”
And, she points out, buying art from galleries is not the only option. Competitions such as Absa’s Atelier and Sasol’s New Signatures (whose 2012 editions have just been launched) not only give public exposure to up-andcoming artists, they give the sponsoring institutions the opportunity to buy artists at stages of their careers before their prices have really taken off. She adds that, since PPC started its cement art competition, “PPC has become a generic name for cement in the sculpture community, a wonderful example of how investment in art can have marketing spinoffs.”
Mind you, some companies don’t seem to see the marketing benefits of an art collection, or have become defensive about drawing attention to them in current economic conditions. Take BHP Billiton, which refused to let me interview its art consultant and was prepared only to have an investor relations person vet prepared answers to presubmitted questions. I usually refuse to do this as it reduces an interview to sanitised PR flack, but because of the status of the collection I went ahead. As they hadn’t replied by my deadline, I needn’t have bothered.
What a contrast from when what was originally the Gencor collection was being put together by then-CEO Brian Gilbertson, advised by Kendall Geers. One of the legends of the corporate art world is that when a new acquisition (a painting by Harold Rubin) was criticised by some members of staff as blasphemous (remember, Gencor was an amalgamation of General Mining and Federale Mynbou), Gilbertson had it hung behind his desk so that every visitor should be confronted by it. Today, even discussion of the collection is apparently taboo.
Mark Read, director of Joburg’s oldest established gallery, Everard Read, has probably sold more art than anybody to our top corporations. Does he feel their primary objective was investment? “No, buying art is a mix of imperatives, desires and ambitions. The average large corporation that has a budget for art is reflecting a feeling on the part of management or the board that it’s important to support South African visual culture, a ‘warm fuzzy’, if you like.
“A collection of good contemporary art shows an understanding of the social forces at work in SA today. Art is part of the experience of life. An institution like the Rupert Museum [in Stellenbosch] is very much a manifestation of the family’s interest in the development of our cultural history.“
But though I don’t believe many companies see an art collection as a way of making money, it certainly becomes a store of wealth.”
A slightly different approach is taken by Monna Mokoena of Gallery Momo, largest purveyor of art to our new rich (you’ll find no Sterns or Pierneefs on his walls). “It starts off as a decorative process but soon changes. The next step is a social, altruistic exercise, to encourage black artists. Then, when we report back on how a collection has appreciated, the attitude changes. We get asked for annual valuations. The art may not be considered primarily as an investment, but it’s certainly a back-up asset should things go wrong.”
Whatever the motivation, and whatever purchasing structure is followed, one thing is clear: developing a successful – and hence increasingly valuable – corporate art collection requires commitment from the very top. Some give complete freedom to their art advisers or curators, others want proposals run past top execs, others have a purchasing committee. Sanlam’s, for instance, has included the likes of artist Willem Boshoff, National Gallery curator Hayden Proud and historian Gillian Carman, and though Loedolff feels that corporate buyers tend to stay in the middle of the road, Hundt says his committee has approved some controversial purchases.
Others may be less fortunate: it will be interesting to see how the buying policy of the committee that Absa is considering setting up will vary from the freedom Loedolff enjoyed for almost three decades. Teresa Lizamore, of Artspace Gallery, who preceded Loedolff at Sasol for 27 years, stresses the importance of support at the top.
“Stegmann was an amazing talent scout and very involved. His successor, Paul Kruger, didn’t know much about art at first but got involved and now has a big personal collection. Pieter Cox didn’t have the same passion but trusted the integrity of his art advisers and kept the collection alive. Sadly, after that, responsibility devolved to lower management, who were less interested, and it became more difficult.”
When Rand Merchant Bank was established in 1977, its founders, driven by a respect for talent, made art a focus area of their greater corporate investment programme. Though founder director Paul Harris has a great interest in art (he’s now co-owner of the Everard Read gallery and has his own contemporary gallery at his Ellerman House hotel in Cape Town), group economist Rudolf Gouws, another arts enthusiast, was selected as custodian of the collection.
Lizamore, still a consultant to RMB, says: “Their approach was totally different from Sasol’s. They wanted to keep their staff happy. Everybody, not just the directors and top executives, got an art work for their offices. They never intended to create an expensive collection.”
But because of the commitment to support young local artists, that’s what they ended up with. In a brochure published last year, Harris writes: “For a long time I had a Karel Nel in my office … I think we spent about R20 000 on his painting, which could now be worth more than R500 000 … but pieces like that are exceptions … it was never our intention to accumulate expensive pieces of purely investment art [but] at the end of the day a lot of artists have been encouraged to keep working and growing by the fact that companies like ours have bought and showcased their pieces.”
One of the most individual collections belongs to lawyers Webbber Wentzel. When it moved from the CBD to Fricker Road in 2000, it set out to build an entirely new contemporary South African collection, initiated by senior partner David Lancaster, who admits in a catalogue published last year that he started off as “little more than an enthusiastic amateur” and credits consultants Carol Lee and Mandy-Lee Meyerson’s support and guidance. That may be so, but Lee tells me it was very much his choice, which may be why it contains a few less familiar names, such as Jenny Parsons and Clementina van der Walt.
But there’s no doubt that in hard times art has been a soft target for corporate cost-cutting. Sanlam is one of the few companies where Hundt says he still has a reasonably healthy budget – “enough to stage exhibitions.”
He concedes, though, that there is no new money for acquisitions, but proceeds of any disposals have been ringfenced for this purpose.
Bayliss says Absa will buy from the Atelier – but “cautiously”. Others make similar noises. Gallerists Mokoena and Read confirm that institutional buying has been squeezed, though the former at least hopes that the corner is slowly being turned.
Let’s hope so. For while buying art may not always be a good investment as such, it’s one of corporates’ few areas of social spending that, over time, could grow in value, as well as being an essential support for our creative artists.
April 25 – May 29 2012 | IM | 3
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