Flashy Malaysia financier said to sell Picasso, Basquiat at loss

FEB 12, 201612:31 PM

[NEW YOERK] Malaysian financier Low Taek Jho has attracted attention for his flashy lifestyle and real estate deals, as well as his connections to the prime minister's family and the government's troubled investment fund.

Now Mr Low is once again creating buzz in the art world.

Since Feb 3, he has sold works by Claude Monet, Pablo Picasso and Jean-Michel Basquiat, according to three people familiar with the matter. 

They fetched about US$54 million, with unusually steep losses on at least two pieces.

The artworks consigned by Mr Low were among the top lots at Sotheby's evening auction of Impressionist, modern and contemporary art in London this month.

All three had been pledged as part of the collateral for a loan of about US$100 million from Sotheby's Financial Services, two of the people said, asking not to be named because the information is private.

Mr Low fielded questions last year over Malaysia's government investment fund, 1Malaysia Development Bhd (1MDB), whose advisory board is headed by Prime Minister Najib Razak.

1MDB has been the subject of overlapping investigations in Malaysia, Singapore and Hong Kong amid allegations of financial irregularities. Mr Low told newspapers that he provided informal consulting to the fund, but didn't break any laws and wasn't being investigated.

Mr Low and his representatives at Hong Kong-based Jynwel Capital, which he co-founded and leads, didn't return calls and e-mails seeking comment on the art sales. Sotheby's declined to comment.

Turning Heads

The 34-year-old financier has coveted the spotlight, partying with Paris Hilton and appearing on the red carpet with singer Alicia Keys.

He also posed for a photo with Leonardo DiCaprio at the 2013 Paris premiere of 'The Wolf of Wall Street', produced by a company co-founded by Prime Minister Najib's stepson Riza Aziz, a longtime friend of Mr Low's.

Mr Low turned heads in the art world in 2013 and 2014 with a shopping spree for trophy pieces.

While he personally examined the works and negotiated prices, one of the people said, it's unclear whether he used his own money, family money or made investments for clients.

More recently, Mr Low has been a seller. This month, his 1935 painting by Picasso - a portrait of the artist's lover, Marie-Therese Walter - fetched 18.9 million pounds (S$38.5 million).

Sotheby's catalog shows the unidentified seller had bought the piece at Christie's in November 2013, and auction-tracker Artnet lists the price then at 45 per cent higher.

Basquiat's 1982 oilstick drawing 'Untitled (Head of Madman)' garnered 6.2 million pounds. It had last sold for about 33 per cent more in November 2013.

The third work offered by Mr Low, Monet's painting of the Palazzo Ducale in Venice, sold for 11.6 million pounds, falling below the bottom end of the presale estimate.

Sotheby's catalog shows the consignor acquired the piece from a Swiss collection. Because that transaction was private, it's hard to determine whether Mr Low made or lost money.

'Unforgiving' Market

The losses on a Picasso and Basquiat show how quickly fortunes can change even at the top-tier of the art market. Prices have been climbing since 2010, helped by the arrival of newly wealthy investors from emerging economies seeking status symbols and more assets to hold their money.

Participants now are questioning whether values will hold up amid this year's global market rout and a drop in art auction sales.

"The auction market is quite unforgiving," said David Nash, co-owner of Mitchell-Innes & Nash gallery in New York.

"The buyers don't like to see things come back so quickly. They don't find the works so attractive the second time around. A lot of the resistance has to do with the fact that the work is no longer fresh. A lot of it has to do with the perception that the seller has overpaid."

Questions about Mr Low's ties to the family of Malaysia's prime minister had surfaced in a Feb 2015 New York Times article. Starting in about 2010, the article said, Mr Low used a shell company to buy a Park Laurel condo in Manhattan for about US$24 million, and then resold it to a shell company controlled by Mr Riza, the prime minister's stepson.

Mr Low also snapped up a US$17.5 million Beverly Hills mansion and resold it to Mr Riza. A Low shell company also bought a Time Warner Center condo for about US$31 million.

Mr Low said the transactions were done "on an arm's-length basis" and denied "engaging in any wrongful conduct in relation to the prime minister and his family," according to a statement issued by his spokesman.

Sotheby's Financial Services, which offers different types of art financing, is a rapidly growing business for the company. Works pledged as collateral for loans often make their way into Sotheby's auctions.

In such cases, Sotheby's can recover its principal and interest from the loan and earn a commission from the sale.

Earlier Profit

Mr Low has been selling off art at Sotheby's since at least a year ago, the two people familiar with the matter said.

Last February, his 10-foot-tall Gerhard Richter abstract painting fetched an artist record 30.4 million pounds in London, selling to billionaire Ken Griffin, the founder of hedge fund firm Citadel. Mr Low made money on that painting, according to a person familiar with the sale.

In May, Mr Low's 8-foot-tall yellow and blue Mark Rothko painting sold for US$46.5 million, the top lot of Sotheby's contemporary art sales in New York. The 1954 painting, which was once owned by American socialite Rachel 'Bunny' Mellon, was estimated to attract US$40 million to US$60 million.

In October, Mr Low's black, punctured, egg-shaped canvas by Lucio Fontana fetched 15.9 million pounds in London, leading Sotheby's mid-season contemporary art sales and setting what was then an auction record for the postwar Italian artist.

Mr Low still owns Basquiat's 6-foot-tall and 7-foot-wide painting, 'Dustheads', according to a person familiar with the situation. He bought the 1982 canvas at Christie's in May 2013 for US$48.8 million. That was almost double the presale's minimum target of US$25 million. The price remains a record for the artist at auction.

BLOOMBERG