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May 22, 2012

Hedgehog Issue 26

By Spear's

Big budgets, blown budgets, the Budget

Going, Going…Gone!

The large Gerhard Richter, a bright squeegee painting, sat impassively on the wall as it listened to Nicholas Maclean. Maclean, former co-head of Imp and Mod at Christie’s and now co-owner of private gallery Eykyn Maclean with his former co-head, Christopher Eykyn, was wondering why auctions were being hammered.

He had been describing how top works of art now tended to go through private sale. One example is the Qataris’ $250 million purchase of Cézanne’s The Card Players which went nowhere near the block. As Spear’s reported last year, the two main houses now do $1 billion — and growing — in private sales annually, drawing the works at the very top end out of the public market. There was also the ‘quandary’ of fetching higher prices privately versus having work decent enough to warrant an auction.

This means auctions largely miss out on the best pieces, even if auction houses still do some of the deals behind the scenes. Auctions, then, are full of good but not exceptional work, and Maclean says sales have declined over the past twenty years (the mini-booms excepted). So what is the point of them? ‘That’s a good question. There are always people who like the comfort of bidding against someone else.’

It’s not a question which will trouble Maclean too much. The gallery, which also has a branch in New York, allows them to work at this high end, buying and selling on behalf of their clients, but also to put on choice shows, like their second London offering, Interviews with Artists, which opens on 19 June. The gallery will have up to three of these a year, and they’re not necessarily selling shows but rather carefully put together from loans. It’s one of the reasons Maclean created his own gallery: ‘When you work in auctions, your ability to curate is almost non-existent. We can present maybe a new idea that’s not being pursued on that artist. We can be slightly more fleet of foot.’ It is a salutary contrast: a gallery which is fleet of foot yet doesn’t run around after the latest trend.
30 St George Street, W1
Smart to Market

Why would anyone launch another financial market precisely at the moment when financial markets are the object of odium, scorn and humiliation? The answer is not (just) because there is capital to be raised but because — with the Social Stock Exchange — there is good to be done.

Mark Campanale has been working on the idea of the SSE for nearly a decade, but only now, thanks to the financial crisis, has the moment come. The Rockefeller Foundation backed Mark and his business partner Pradeep Jethi with $500,000 and in February, the business closed a £2 million investment round led by family offices, foundations and Big Society Capital.

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When we meet at the Park Lane Hilton, he is fresh from a conference panel on ‘new’ and ‘old’ philanthropy. He quickly enumerates the three reasons why the Zeitgeist is with his concept, which allows social enterprises to access capital for expansion and reinvestment on the open market. ‘The first is a broad understanding in the general public discourse that markets and systems and banking in particular are broken,’ especially since the financial crisis and with regard to their social value.

The second is that foundations are realising they need to invest more smartly, and the third is that ‘with the challenges of the future that we face — a population of nine billion, fast-growing economies in South East Asia, Africa and Latin America — the relationship between the state and the private sector is changing.’ Whereas the state in the Western world has provided healthcare, education, clean water and such for free or at subsidised prices, it can no longer afford to do that. ‘The state is breaking down,’ he says, yet he later adds: ‘One of the things we’re not is a platform for the privatisation of state-run services.’ In the developing world, there is simply no state-run safety net.

It is a dark world of state and fiscal breakdown Campanale sees, yet his vision is supremely optimistic: the trading arms of charities can act like businesses, supporting a double-bottom line of financial and social returns, and investors can put them into their portfolio as a sustainable, profitable investment. He would like to see the first social ISA and pension plans investing in social enterprises.

His work has not gone unnoticed. At a recent reception for the launch of the Broadway Property Fund, which will allow a charity to raise £45 million to invest in London housing for the homeless, a perfect example of market and morals meeting, Work and Pensions secretary Iain Duncan Smith said he wanted to see more solutions like this to our pressing social problems and referenced the SSE. The social investment market, he said, is worth £190 million today, compared with £3.6 billion of philanthropic grants, and he quoted Sir Ronald Cohen: ‘Impact capital is the new venture capital.’

Campanale acknowledges that markets suffer from a range of ailments — bubbles, panics, crashes, over-complexity — but he says that the nature of the Social Stock Exchange will combat that. ‘We’re trying to build the social mission into the DNA of the exchange itself. Our exchange is not going to be making revenues through turnover, only through a listing fee,’ so they have no incentive to encourage high-frequency trading. The companies themselves also, of course, have social intents and are long-term prospects, so investors after a quick buck will fall away. When it launches in 2013, Campanale expects the Social Stock Exchange will have eight to ten companies listed, some of which may be listed elsewhere too, and hopes for steady growth thereafter.

The Social Stock Exchange is based, appropriately, at The Exchange, a hi-tech space in an unassuming office block above All Bar One by London Bridge Station.

It’s a hub for social enterprises and it was clear from a visit that some of the brightest ideas in the field were being developed there. It is these sort of businesses that will benefit from the Social Stock Exchange, a FTSE for the social investor.

Merchants, No Ivory

London is not short on chic African culture — from South African diamond merchants on Bond Street to Ethiopian restaurants beyond Zone One — but it lacks an appreciation of the broad range of high-end craft and design from Sub-Saharan Africa.

Lucky, then, that Hanneli Rupert is bringing Merchants on Long, her Cape Town luxury store, to a pop-up at Bluebird in the most diverse street in London, the King’s Road.

Africa has been assimilated, but not appreciated, says Rupert: ‘We’ve found European designers using African prints, but not stuff coming from Africa. Merchants is true to being a concept store, so we sell brands across the board, from homeware and perfumes to clothing and music.’ The silverwork of Patrick Mavros probably rings a bell, but the bright printed clothes of NearFar from Sierra Leone and the woven baskets of Design Afrika all deserve attention.

Perhaps luxury is in the genes. Rupert is the daughter of Johann Rupert, CEO of the Richemont group (Dunhill, Cartier, Net-a-Porter and Vacheron Constantin, inter alia), so she must have absorbed high-end marketing in her mother’s milk. Coyly, she says it’s difficult to identify what she picked up from her family, crediting patrilineal marketing skills and matrilineal creativity, but such coyness is understandable for one trying to be seen outside her family’s shadow.
Merchants is at the Shop at Bluebird, 350 King’s Road, during May

Nickels and Dimes

The world of philanthropy throws up people with many talents: some are exquisite at extracting money from the recalcitrant wealthy; others can boost the confidence of those at a very low ebb; others still devise innovative schemes for solving our problems. Very few of them, however, are sign language artists like Barry Nickelsberg of the Carter Center, the charity set up by the former president.

As described on his website, Nickelsberg ‘incorporates dance, mime, gesture and facial expression to convey the rhythm and emotion of the music’. (A video on YouTube must be seen.) It was all these skills that Nickelsberg used during our conversation back in December at the UBS Philanthropy Summit in St Moritz as he vividly outlined how he asks for money for the Carter Center, whose twin aims are fighting disease and waging peace.

Or rather, he doesn’t ask for money. Americans’ number two fear — after public speaking — is asking for money, so ‘here’s my mantra: “I’m going to give you, Josh, an opportunity to make an investment in the future of our community. I feel like a broker with a hot tip. Let me tell you about the Carter Center.”’ He will talk about schistosomiasis, a vile parasitic disease endemic in Nigeria, and how it kills children. ‘“I’m not asking you for a donation — I’m offering you an opportunity to invest in the future.” I don’t ask for money — I lay it all out and let them decide what they want to do.’
By this point, with his performative variety of timbres, tones and tempos, I was ready to write a cheque — as have been Bill Gates and Warren Buffett, who calls his annual donation ‘the best investment he makes every year’, according to Nickelsberg. Like Gates and Buffett, the Carter Center sees the future of philanthropy in partnering with governments: it harnesses already extensive resources with external entrepreneurial pizzazz.

Isn’t there a problem with the wealthy using philanthropy for public redemption? ‘I think that’s been true for time immemorial. There are people who have made money through — well, the drug cartels of Latin America created schools, they built hospitals — it’s a way of trying to redeem their reputation or buy the support of the local people. Some of the early families of great wealth that were building libraries — they chose to make sure that they were remembered for more than just the corporations that they built.’ This doesn’t mean a charity shouldn’t be careful where its money comes from, he stresses.

After St Moritz, where he was speaking, Nickelsberg was heading back to America to interpret a performance of The Messiah. When Hedgehog asked him how he would interpret the Hallelujah Chorus, he said he’d considered that and that if he could choose when he’s going to die, it would be at the very moment that section finishes. If his good work is going to continue, we must hope that does not happen for some time.

Hard Graf(t)

Scandinavia may be weathering our economic winter with hardiness — Norway, with its oil and shipping, has never been richer — but its HNWs aren’t yet quite used to the privilege and exacting standards their wealth can bring.

Take travel, for example. Leija Graf, founder of Select Collection, the first Nordic luxury travel agency now celebrating its twentieth anniversary, says that while ‘travellers here in the UK are more advanced’, wanting better and more detailed service, ‘in Scandinavia they’re still learning’ to be demanding.

These local high standards explain the Select Collection store on South Audley Street — Graf says ‘face-to-face’ contact is key for the Brits wanting to book their holiday to Chile, Oman or New Zealand. The space avoids Swedish modern (read: Ikea) for a blanched minimalism, colour accents coming from the jars of sand from Select Collection resorts: black flecked with grey from Bali, pale white from Thailand, rough biscuit from Spain. There are also objets for sale picked up from Graf’s travels (although no tan).

Graf, who says that people thought she was crazy for starting a luxury business in a deep recession, realised that a recession is exactly when luxury goods — first-class flights, five-star suites — can be obtained more cheaply. Well, apart from our current recession, of course: the top hotels are oversubscribed at peak times and few places want to lower their prestige by lowering their prices.

It is not recessions, however, which have been the biggest challenges for her business. ‘The worst one was 9/11. For three months the phone didn’t ring — and if it did, it was a cancellation. In a recession you can predict some things but this was the fact that everyone was scared to go on planes.’

The Boxing Day tsunami was terrifying for her because she had 800 people in or en route to Thailand. Graf did her best to re-route them, so one ended up on safari in Kenya — having only prepared for a beach holiday.
62 South Audley Street, W1
La Ville Nouvelle

New City Initiative, the lobbying group of small- and medium-sized UK wealth managers, is to launch in Europe in an attempt to influence EU financial regulations. The group, according to one of its members, gauged positive interest at a meeting of French wealth managers and will launch later this year.

Although there are many fewer firms in continental Europe of the size of founding members Stanhope Capital, Vestra Wealth or Odey Asset Management — the sector is dominated by large banks — the source at NCI said that there were enough to make a new branch worthwhile.

The source said that NCI had been advised in its meetings with officials from the FSA and government that if it wanted to influence European policy, it would have to set up in Europe, rather than just in Britain.

Spear’s first reported on New City Initiative in late 2010, when founder Daniel Pinto of Stanhope Capital said that NCI would campaign on issues such as alignment of manager interests with clients’ interest: ‘If you don’t tackle the core issues of why are people inclined to take excessive risks, you will have another 2008.’

New City Initiative also offers internships at its member firms to disadvantaged people. In 2011, Spear’s awarded its first City Champion Award for moral leadership to NCI.
Zheroes Heroes
To City Hall by the Thames, for the launch of Plan Zheroes in the atrium of Temple Boris, that giant glass upturned pineapple. The fruit analogy, rather than the more anatomical phrase that the building is more popularly compared to, is apt, as Plan Zheroes is a food charity.

A disturbing number of people in London suffer not only from fuel poverty but also from shortage of food. The facts speak for themselves: an estimated 20 million tons of food is wasted in Britain every year from the ‘plough to the plate’. There are four million people struggling to eat properly — ‘below the breadline’, as Plan Zheroes put it. The UK’s retail food industry sends 1.6 million tons of ‘surplus’ (ie unwanted, unbought, uneaten) food to landfill sites.

The idea behind Plan Zheroes is to get food and restaurant businesses to ‘give their surplus food to those who need it, so it will never go to waste’. Businesses already signed up include EAT, Subway and Tesco Express. Others such as Pret-a-Manger already have their own food waste programmes.The idea behind this food philanthropy movement is that instead of throwing food away, you donate it.

The project was dreamt up by an Austrian princess called Lotti Henley with support from the likes of actress Georgina Rylance and journalist and broadcaster Rosie Boycott. Georgina was at City Hall to lend her support to the launch, which aims to create what she calls ‘Zero Food Waste Heroes’.

As somebody who regularly has to get up at 5am to report to the set, Georgina often drives through the empty London streets in the morning where the homeless sleep out rough, under arches, on benches or on the pavement. Her role is to help raise awareness and get businesses to realise that they can do their bit by making sure that edible food is not trashed.

Although our readers are far too well brought up or conscientious ever to leave food on a plate in a restaurant (especially when a plate of fresh black truffle pasta at Harry’s Bar may set you back close to £100), even the bins of the very best managed hotels and restaurants are often shockingly full of fresh and edible food — often from the very best suppliers around the country. Let’s turn the war on the waist to a war on waste.
To become a ‘Zhero’, all you or your business needs do is to register at or email
Black Gold (Not That Kind)

Devised spontaneously over dinner in Selfridges (see our interview with Ewen Venters), the Caviar Club is a super little thing. Private-club-esque but infused with the excitement of the pop-up movement, it darts around London.

The first gathering took place at the Latvian embassy, with famous faces, food enthusiasts, ambassadors and Hedgehog all sitting down to enjoy the collaboration between Mottra Caviar and Mark Hix, supported by Laurent-Perrier and Spear’s.

Caviar, despite its decadence, has never been associated with forbidden-food rituals, and Mottra caviar won’t have PETA calling because the fish isn’t harmed during harvesting. Unless you’re calorie counting you can indulge yourself — think of it as popping candy for grown-ups.

The beads of jet-black unctuousness are shown at their very best at one of the club’s dinners, be it atop creamy duck eggs or perilously balanced on a smoked salmon blancmange.

It has been suggested that the next meeting will take place at the newly opened London Belgraves, with plans to move the club to beautiful properties in the Home Counties too. Enquire quickly to secure your place at the next dinner as — just like any private members’ club — places are limited. You wouldn’t want to be turned away at the door now, would you?

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