THETEMPLEOFTREASUREWHO IS THE GUARDIAN OF THETROVE BURIED DEEP BENEATHINDIA’S RICHEST SHRINE?

BY A M Y K A Z M I N

2 0 14 AU T U M N W W W. F T. C O M W E A LT H 2 0 14 AU T U M N W W W. F T. C O M W E A LT H 2 0 14 AU T U M N W W W. F T. C O M W E A LT H

wealthFT

RI C H AN D I N JAI L G EO RG IAN WI N E AU CTIO N H O U S ES B EC O M E TEC H SAV V YRI C H AN D I N JAI L G EO RG IAN WI N E AU CTIO N H O U S ES B EC O M E TEC H SAV V YRI C H AN D I N JAI L G EO RG IAN WI N E AU CTIO N H O U S ES B EC O M E TEC H SAV V Y

Sree Padmanabhaswamy

Temple, India

CONTRIBUTORSDalya Alberge is a freelance arts journalistDaniel Ben-Ami is a freelance journalistand writerJohn Dizard is an FT columnistJeremyHazelhurst is a freelance journalistAmyKazmin is the FT’s South AsiacorrespondentMaya Jaggi is a cultural journalist, critic andliterary prize judgeRohit Jaggi is the FT’s aircraft, car andmotorcycle columnistJamesMackintosh is the FT’s investment editorSteveMcDowell is a freelance journalistAttracta Mooney is a reporter at Ignites EuropeSarahMurray is a regular FT contributorAdam Palin is a reporter at FT MoneyMatthew Vincent is the FT’s deputy companieseditor

Vincent Manancourt, Rochelle Toplensky andPatrick Fergusonwere all recent FT interns

Buried treasure: what better way to ease yourself back intothe September office than a tale of billions of dollars’ worthof emeralds and sapphires found deep in the tunnels beneathIndia’s Sree Padmanabhaswamy Temple? But, as Amy Kazminreports, wrangling over the guardianship of the estimated$22bn trove has been snarled in litigation for the past few years.Drawing in the former royal family, the tale has everything,including an unopened vault that might contain yet more gold –but could also be cursed.

Christie’s is also looking for treasure – this time throughdevising better ways to engage with its clients, digitally. Butwhile an algorithm, explains Steven Murphy, chief executive ofthe auction house, is not going to tell you “whether a particularDiane Arbus print will sell”, John Dizard reports on how it willenable it to tap into new – and hopefully lucrative – markets.

We are always interested in your views, so do let us know yourthoughts on both these articles and the rest of this edition of FTWealth at the email address below.

Hugo Greenhalgh, Editorhugo.greenhalgh@ft.com

Special reports editor Michael SkapinkerHead of editorial content Hugo GreenhalghDeputy editor Rohit JaggiProduction editor George KyriakosSub-editor Philip ParrishArt director Sheila JackPicture editor Michael CrabtreeGlobal sales directorDominic GoodAdvertising Mariam LolavarPublishing systemsmanagerAndrea Frias-AndradeAdvertising productionDaniel Lesar

FT WEALTHSEPTEMBER 2014

Hidden fortunes

4 FT.COM WEALTH

THE TEMPLE EVEN HAS ANUNOPENED VAULT THAT MIGHTCONTAIN YET MORE GOLD“ “

COVER PHOTOGRAPH:INDIA VIEW ALAMY

YOUR NEXTFT WEALTH

December 5 2014Follow us on Twitter @FTReports

PHOTOS:DREAMSTIM

E;REUTERS;JE

NNYSOUTH

OPENINGSINVESTMENT FOCUSNews and statistics, andcomment by Mick GilliganTHE IDEAS COLUMNWe have to hope smart beta is notanother example of dumb alphaTHE RICH COLUMNHow the villains of the wine worldplay on the vanity of collectors

FEATURESCLICK AND COLLECTInternational auction houses aregoing through a digital revolutionand devising ways to tap into thepreferences of their clients amongthe new global rich

A TASTE FOR TRADITIONGeorgia’s winemaking industry wascrippled by Russia’s 2006-13 importembargo. But since that was lifted,a rich viticultural heritage has beenallowed to flourish once again

TROUBLE AT THE TEMPLEThe Sree Padmanabhaswamy Templein India is said to contain $22bn oftreasure, but custodianship of theriches is mired in a long-runningdispute between the state authoritiesand the former royal family

6

8

10

12

18

24

CONTENTS

INSIGHTEQUITIESDon’t judge technology companies bytheir often bizarre pitches to investorsWEALTH MANAGEMENTWealth managers are having to mergeto survive as regulation gets tighterINVESTMENTDespite the hype, newly floatedcompanies can prove lucrativeINVESTMENTThe joy and pain of owning a racehorsePHILANTHROPYInstitutional naming rights aregaining favour among wealthy donorsPLANNINGHow to soften the blow if yourfinancial dealings land you in jailPLANNINGKey steps to preserve wealth for yourloved ones when you are goneBOOK REVIEWThe New Class Conflict by Joel KotkinCAR REVIEWRohit Jaggi drives the BMW i8LIFESTYLERoad car track daysBUSINESS GURUOfra Strauss of Strauss Group

37

40

42

44

46

48

50

52

54

56

58

FT WEALTH ONLINEVIDEOTrack record: Rohit Jaggi speedsaround Brands Hatch in an attempt togain his racing track licenceVIDEOCar review: Test-driving the BMW i8with Rohit Jaggi

www.ft.com/wealth

XX

XX

44

56

XX

50

FT.COM WEALTH 5

18

10

Investors in India have enjoyed aheady few months. The election ofprime minister Narendra Modi inMay brought great optimism thatreforms, delayed by the previousgovernment, would be realised.

Many analysts now see suchoptimism – with reforms facing stiffopposition in the parliament’s upperhouse – as fully priced into valuationsfor Indian equities, which have had astrong year so far. The Mumbai stockexchange index, the Sensex, was up22 per cent from the start of 2014 tothe end of July.

Shares that have offered securityduring the downturn in Indian

growth, such as informationtechnology companies with globalmarkets and providers of domesticstaple consumer goods, have fallenout of favour with investors.

Notwithstanding concerns aboutIndia’s creaking infrastructure, aswell as the state’s subsidy system –estimated to cost $43bn a year – anumber of fund managers haveincreased their exposure to cyclicalIndian businesses.

With domestic consumptionpredicted to rise over the nextcouple of years, companies offeringdiscretionary goods and services lookset to benefit strongly.

InVESTMEnTFoCuSADAM pAlIn

6 | FT.CoM/wEAlTH

$43bnIndia’s annualgovernment subsidies

SourCE: CEIC DATA

india has been one of the strongest-performing global equity markets thisyear. the market has risen on a waveof euphoria that both anticipated andfollowed the electoral success of theBharatiya Janata party (BJP), led byNarendra modi on a reformist ticket.

this is an encouraging developmentfor investment in india, given modi’strack record in the state of Gujarat,where he oversaw economic growththat averaged around 10 per centannually during his 12-year tenure.

however, creating a pro-businessenvironment on a national level is amuch bigger challenge, particularly asthe BJP does not have control of theparliament’s upper house.

another barrier to investment inindia is inflation, which has not fallenbelow 5 per cent on a calendar yearbasis since 2005. Being a net importerof energy has not helped either.

the stock market is taking avery optimistic view of the newadministration’s ability to deliver resultsquickly. this is reflected in an equitymarket that now trades on a multiple of16 times this year’s expected earnings.

india’s strong entrepreneurial spiritmanifests itself in some attractive,well-managed listed businesses andmakes india an appealing home forrisk-tolerant, long-term capital.

however, there is a lack of dividendyield to reward the patience of thelong-term investor. this and currenthigh valuations mean we wouldtemper any enthusiasm to invest tooheavily in the near term.Mick Gilligan is head of research atwealth manager Killik & Co

Consumers set to bekey driver for India

91%of Indian high-net-worthindividuals viewdriving positivesocial impact asvery important

SourCE:CApGEMInI AnDrBC wEAlTHMAnAGEMEnT2014 worlDwEAlTH rEporT

THE roADAHEADMICkGIllIGAn

Photos:dream

stim

e;bloomberg;afp/g

etty;charlie

bib

by;SubhaSh

Sharma

graphic

:ruSSell

bir

kett

What is the fund? Aberdeen AssetManagement’s Global Indian Equityfund invests in Indian equities andcompanies focused on the Indianmarket. The £3bn fund is investedacross sectors, with roughly one-fiftheach in financials and informationtechnology.

Why should I buy it? The fundinvests in Indian banks such as HDFCand ICICI, plus companies suchas car component maker Bosch(majority-owned by its Germanparent), that are set to gain froman anticipated rise in domesticconsumer expenditure. The fund hasoutperformed the Sensex benchmarkfor Indian equities over the past fewyears, gaining 78 per cent in the fiveyears to July.

Why shouldn’t I buy it? The perils ofinvesting in a single-country marketfund – particularly in emergingmarkets – are illustrated by Indianequities’ performance in 2011: the fundlost 26 per cent of its value. Given therecent volatility of the rupee, there areexchange-rate risks too.

FT.CoM/wEAlTH | 7

1.25bnPopulation ofIndia, 2013SourCE: worlD BAnk

22%SenSex Index rISe,January-July 2014SourCE: THoMSon rEuTErS

Investing in...India

I wish I had bought

Jupiter India

I’m glad I didn’t buy

Performance over the past three years(Indian funds, cumulative returns,% to end of July 2014)

-8.4

19.1

8.6

6.9

-2.1

-1.5

HSBC GIFIndian Equity

JPMorganIndia A

Aberdeen GlobalIndian Equity

ParvestEquityIndia

Goldman Sachs India Equity

“ “9.1% Fall In IndIanhouSe PrIceS In 2013,InFlatIon-adJuStedSourCE: CApGEMInIGloBAl propErTy GuIDEHouSE prICE InDEx

SourCE: lIppEr

PHOTOS:CHARLIE

BIB

BY;GETTY;DREAMSTIM

E

THE IDEASCOLUMNJAMESMACKINTOSH

The financial servicesindustry has spenthundreds of yearsperfecting new andexciting ways ofseparating investorsfrom their money.

It typically starts with the realisationby someone – David Swensen, chiefinvestment officer at Yale University, forexample – that there is a different wayto invest. Whether by luck or judgment,that method works; Swensen boughthard-to-trade assets and investedheavily in private equity – ideal for theboom years. Early copiers also makemoney, and soon the industry developsproducts to take advantage.

What became known as the “Yalemodel” resulted in a flood of moneyheading to second-rate private equitycompanies as the industry expanded,while fundmanagers created Yale modelfunds to collect money from wealthyindividuals keen to copy Swensen.

Yale did brilliantly from theapproach, but eventually it wasdoomed to the same boom-bustcycle as any other popular style,as too much money flooded inand valued scarce assets too highly.

Sashaying down the catwalk towardsinvestors is the latest financial servicesfashion, under the name of “smartbeta”, “scientific beta” or “strategic beta”.Money has poured into exchangetraded funds taking the approach,which now encompasses morethan $500bn, on some estimates.

The idea is simple enough.Much of the return from a high-fee stock-picker fund comes not fromselecting the best of any given sector– Shell against BP, for example – butfrom being broadly overweight smallercompanies, or low-risk companies, orfrom capturing trends, or even simplyavoiding weighting by market value.Each approach has been used to greateffect by investors who were early toadopt them, notably Warren Buffett.

The latest pitch is that these returnsare available on the cheap. Ratherthan paying 1 per cent a year or moreto an active manager, construct yourown portfolio from cheap trackers of“smart beta” models. Those selling theproducts wield impressive sheaves ofacademic evidence about their pastsuccess. They can also explain why theywork: the foibles of investors.

Momentum strategies, which buyshares that are going up and sell thosethat are dropping, work becauseinvestors tend to follow the herd.Buying into unpopular “value”

stocks works because investorstend to get overly depressed aboutcompanies that do badly, pushing down

the price further than is justified.Boring, low-volatility stocksoutperform over time because fundmanagers prefer exciting companiesthat might beat the market overa short period, meaning the dullshares are cheaper than they should

be – one way Buffett beat the marketfor so long. (There are competingexplanations, too.)

If too much money starts chasingthese strategies, they will stop workingor, worse, lead latecomers into disastersof the sort experienced by those whoadopted the Yale model in 2007. Onthe other hand, early entrants shouldprofit handsomely if the anomaliesare eliminated, as shares discounted

due to behavioural issues rise to valuesjustified by their fundamental risks.

Judging whether value, momentum,low volatility or other factors areoverdone is not a science. There is nomagic amount of money that wouldtrigger their end as useful investmentstyles. “Everyone last year was sayinglow vol was done, and then it’s been thebest performer this year,” says VincentDenoiseux, director of systematic fundsat Deutsche Bank’s funds arm.

He accepts smart beta has become abig talking point among pension fundsand large institutional investors. Buthe argues the money invested so farremains relatively small compared withthe overall market.

One question investors can usefullyask is who they are making moneyfrom. To beat the market (“generatingalpha” in industry jargon) with smartbeta, there must be investors whowill underperform. This could be thetraditional fund managers who, afterall, typically fail to match the market onaverage, or it could be private investors,big institutions or hedge funds.

If money comes from existingpassive managers, smart beta returnswill be eroded. But if money is movedfrom active managers to smart beta,investors will be paying lower fees whilestill exposed to the factors behind manygood funds’ performance.

It would be rash to forecast thefailure of strategies that have worked,albeit with long fallow periods, formany decades. On the other hand,smart beta is clearly moving into themainstream, making the past less usefulas a guide to future returns. Buyers haveto hope the hype is ahead of its truepopularity, and smart beta is not merelyanother example of dumb alpha.

Get smart

8 FT.COM WEALTH

The argument for shares hasmutated from talk of economic recovery and risingprofit margins into a claim that shares are, if not a bargain, less overpriced thanbonds. But this leaves shareholders vulnerable to any correction in the bondmarket.

WHAT JAMES IS THINKING....

W

MOMENTUM STRATEGIESWORK BECAUSE INVESTORSTEND TO FOLLOW THE HERD“ “

PH

OT

OS

:C

HA

RL

IEB

IBB

Y;

DR

EA

MS

TIM

E

THE RICHCOLUMNMATTHEWVINCENT

Atarantula, sharks,piranhas, a high-powered laser aimedat the groin, severalhungry alligators,more sharks and atall man with metal

teeth: when millionaire villains soughtrevenge on James Bond, they certainlyspared no expense.

It is perhaps understandable.From the standpoint – or rather, thesitting-down-in-a-black-swivel-chair-with-white-cat point – of a paranoidnouveau riche megalomaniac, agent007 was an insufferable snob. Listeningto him bang on about Bollinger ’55 orthe correct temperature at which toserve sake must have been infuriating.However, I still wonder whether Dr No,and Messrs Largo, Blofeld, Goldfinger,Big (aka Dr Kananga), Strombergand Drax – respectively – might havehad more success had they usedCommander Bond’s elitism against him.

What better way to crush a crushingwine bore than to list recent bids for hispriceless Bolly vintage: only £79 a halfbottle on certain websites. Or point outthat his Vesper martini is made withGordon’s gin: on offer for £14 at Tesco.

Implausible? No more so than theplot of Skyfall. In fact, both Bond filmproducer Barbara Broccoli and theworld’s wealthiest bacchanalians shouldbe aware that a similar scenario has justplayed out for real. Last month, a NewYork courtroom heard how a millionairecriminal mastermind humiliated hisoenophile nemeses by selling them someof the most convincing and expensivefake wines ever produced. He even hada quite good Bond villain nickname:Dr Conti (aka Mr 47).

In real life, and the US prison wherehe will now spend the best part of 10years, Dr Conti is better known as RudyKurniawan, the 37-year-old scion of arich Indonesian family who came tostudy in California in the 1990s. Shortlyafterwards, he was studying little else

but fine wine auction catalogues – andthe bottom of some very expensiveglasses. Reports from the time suggestat one point, he was spending $1m amonth, most extravagantly on 1947burgundies from the domain ofRomanée-Conti – earning himself histwin nicknames and near instantrespect from wine writers. According toNew York magazine, Robert Parker, theworld’s most powerful wine critic, saidhe was “a very sweet and generous man”.

So sweet and generous, it seems,that he decided to make more rarewines available to rich collectors...by blending known vintages withrelatively cheap plonk in his kitchen,pouring it back into old bottles andcreating counterfeit labels.

It was these labels that eventuallyaroused suspicion. Some bearingdates between 1959 and 1971 includedFrench accent marks that were notused on genuine bottles until 1976.One label was even for a 1923 Roumier

Bonnes-Mares, despite the fact that thedomain was not founded until 1924.

But discovery of these illogicalchronologies came too late for theseven wealthy connoisseurs who hadpaid nearly $50m to Dr Conti for hisGrand Vins de Kitchen Table – amongthem billionaire industrialist BillKoch. Kurniawan has been ordered topay $28.4m in restitution, on top of a$20m penalty.

For wealth managers and theirclients, it is arguably a cautionary tale,especially as both are more likely toconsider wine an alternative asset class.A few years ago, Sebastian Dovey ofwealth management research groupScorpio Partnership observed: “Moreand more banks are getting involvedin this space, because typically this iswhere clients are most animated andengaged… I mean, who really wants totalk Sharpe ratios all day long, exceptthe banker? Most people would muchrather debate the consequences of abad winter to the Merlot grape.”

No doubt Goldman Sachs bankerswere checking meteorological historyonly this summer, when this trendreached its natural conclusion and awealthy client sought a loan securedon bottles of fine wine – one of them a1929 Romanée-Conti.

To protect themselves, clients andmanagers need to acknowledge thatfine wine markets are unlike anyother, suggests Oliver Gregson, headof HSBC Private Bank’s investmentgroup in the UK. He warns there isnow “a greater potential for such fraudin a market that overall appears to beriddled with inefficiencies, is frequentlyopaque and can be illiquid, risky andvolatile”.

A perfect scenario for Mr Bond.

Vineyard villains

10 FT.COM WEALTH

W

“ “SEVENWEALTHY CONNOISSEURSPAID $50M TO DR CONTI FOR THEGRAND VINS DE KITCHEN TABLE

Commander Bond’s elitism against him.What better way to crush a crushing

wine bore than to list recent bids for his priceless Bolly vintage: only £79 a half bottle on certain websites. Or point out

Gordon’s gin: on offer for £14 at Tesco.

world’s wealthiest bacchanalians should be aware that a similar scenario has just

York courtroom heard how a millionaire

oenophile nemeses by selling them some

In real life, and the US prison where

aroused suspicion. Some bearing dates between 1959 and 1971 included French accent marks that were not used on genuine bottles until 1976. One label was even for a 1923 Roumier

engaged… I mean, who really wants to talk Sharpe ratios all day long, except the banker? Most people would much rather debate the consequences of a bad winter to the Merlot grape.”

No doubt Goldman Sachs bankers were checking meteorological history only this summer, when this trend reached its natural conclusion and a wealthy client sought a loan secured

ne wine – one of them a on bottles of fi1929 Romanée-Conti.

To protect themselves, clients and managers need to acknowledge that

ne wine markets are unlike any fiother, suggests Oliver Gregson, head of HSBC Private Bank’s investment group in the UK. He warns there is now “a greater potential for such fraud in a market that overall appears to be

ciencies, is frequently riddled with ineffiopaque and can be illiquid, risky and volatile”.

A perfect scenario for Mr Bond.

Reports that the German government is reverting to old technology to preventinternet surveillance made the Enigma cipher machine sold by Christie’s recently for£50,000 look rather good value.

WHAT MATTHEW IS READING:

In the picture: StevenMurphy (above) and“Berlin Duck #2” byJoe Bradley, to beauctioned at Christie’sin New York onSeptember 23

Europe has a great deal of art and America has a greatdeal of moneyJoseph Duveen (1st Baron Duveen), 1869-1939

t took Joseph Duveen and the lesser art dealers of thelate 19th and early 20th centuries a good 50 yearsto give the American rich at least the appearance ofcivilised gentry. Now the international auction housesare trying to do the same for the new class of globalrich in a fraction of the time.

The challenges of meeting the demands of thisnew generation of digitally native wealthy have seen

auctioneers transform themselves into digital informationmanagers. Yet for many long-serving staff this has beenpainful. Four or five years ago, if you asked people at thehigher levels of Christie’s or Sotheby’s how they organisedtheir data, you would be told condescendingly how thiswas a high-touch, not a high-tech, business.

That is over. Duveen was able to create and control thetransatlantic market in art for the wealthy by managinga personal network of paid-for art scholars as well asinformers among servants. That, however, was relativelyeasy. Rich Americans had already accepted English,French and Italian aristocratic country houses as themeasure of cultured legitimacy. Anyone who wantedanything avant garde could find it in Paris, point final.

Today, though, the newer global rich of hedge fundmanagers, oligarchs and tech billionaires are not soswayed by the aristocratic version of art collecting. Onlyabout a 10th of the auction houses’ turnover is in theOld Master paintings that gave Duveen the means tobuy a peerage. The headlined billion-dollar auctions arefor postwar and contemporary art, whose artists mightlive in London, Los Angeles, Berlin, Johannesburg

I12 | ft.com/wealth

➤

click and collectauctIon housesare embracIngdIgItal technologyto sell art to thenew global rIch

BY John DizarD

PhOTO:ChARLIE

BIB

BY

14 | ft.com/wealth

focused or conjecture must fail. We didresearch that showed our customerswere living half their life, if notmore, with online experiences.Even our multi-billionaireclients who were highlyinterested in art and objectswere personally going onlineto study them. The imperativewas clear: we needed to createa digital version of theChristie’s experience in aplatform-agnostic way.”That means that whether the

customer was using an iPhone inan airport, or sitting before a

wall-sized screen connected to asecure corporate network, they

needed the full range of information theauctioneers could provide.

Joseph Duveen could keep a jumble of paintingprovenances and family gossip in his head, and had thenerve to bluff his way through what he did not know.That does not work so well any more. The averageChristie’s client has five devices with a variety of searchengines and social apps.

Christie’s now has James Map (as in founder JamesChristie), a sort of private internal social network thatallows specialists, client service staff, support staff andexecutives to see what is known about a client and histastes. Past auction records, relatives’ purchases and sales,statistical inferences on how likely clients are to movefrom buying an expensive watch online to participating ina high-end evening sale – it all can be in the mix.

The idea, Murphy explains, was “to create an internalapp that spiders into our database of information andbrings up on our internal [screen] environment lotsof connectivity. This is faster and better than the emailchains [that it replaced].”

Systematising information about clients and theirtastes was not just about stopwatch efficiency. Auctionhouses had been managed as alliances of barons andbaronesses who had their own fiefdoms of collectors,consignors and experts. They tended to share informationwith their notional masters in the C-suites of London,

the aVerage chrIstIe’s clIent hasfIVe deVIces wIth a VarIety ofsearch engInes and socIal apps

Click to bid:“Face It

(Magenta)”by Barbara

Kruger (above)and “Beautiful,Hydrochloric,

Non-functional,Expansive,

Vortex, Whorl,Wizz Painting”

by Damien Hirst(right), both to

be auctionedby Christie’s

in London onSeptember 25;

Christie’s in HongKong (top right)

or Shanghai. The nature of theclientele itself is changing:more than one in four ofthe top lots in this spring’sevening sales were bought bynew customers.

The auction houses havebeen under pressure to adaptto this changing universe.While the most visible aspect ofthe houses’ digital revolution maybe their online auctions, the mostessential is in the systematising andnetworking of their customer, marketand lot information. Without that, theauctioneers would lose control of their ability tocharge gross margins in the mid-teens as intermediariesof the $30bn global art auction market.

Within the quasi-duopoly of Christie’s and Sotheby’sat the top of the auction world, Christie’s has now movedto implement what it calls its “digital strategy”. In 2010,François Pinault’s Artemis, the holding company forChristie’s, brought in Steven Murphy, an Americanformer publishing and music executive, as chiefexecutive to effect the transformation. Murphy is less ofa technologist himself than an evangelist for technologyamong creative staff.

At first, he stepped gingerly through the minefields ofthe art auction world, bringing with him outsidersrecruited from the publishing and music industries aswell as consulting and investment banking. he realisedChristie’s had fallen behind its customers’ technicalabilities. “Any good or valid strategy must be driven bythe customers,” he says. “Anything that is just internally

➤ PhOTO:AFP/g

ETTY

16 | ft.com/wealth

“the algorIthm Is a usefultool, but It cannot tell youwhether a partIculardIane arbus prInt wIll sell”

New York, Paris and hong Kong only selectively and ontheir own terms. If they thought they could do better,the specialists or experts would leave for the rival campor set up as private dealers with a Rolodex gleaned fromChristie’s or Sotheby’s extensive files.

This is not to say the staff can simply be replaced byan algorithm. “This is about art, and therefore purelyalgorithmic information technology endeavours don’twork. They are important to our equation, but thatequation must include the human factor,” Murphy says.“The algorithm is a useful tool, but it cannot tell youwhether a particular Diane Arbus print will sell.”

The old-guard auction house staff, though, at times hada provincial manner that could be a barrier to attractingnew participants to the art market. “Some years ago, youcould be a New York client who bought a lot, and then youwould walk into [Christie’s in] Paris and they wouldn’tknow who you were, and you had to start over,” says KenCitron, Christie’s head of IT. “We are a global companynow, with global clients. Our having technology allowsthem to have a consistent experience across the world.”

The auctioneers have not yet gone quite as far as LasVegas casinos, which use facial recognition to see whenbig players enter the house. “There is a line to be drawnthere; it can be kind of creepy,” says Citron.

The digital strategy is also making it easier to takepart in auctions. Even with all the unseen know-your-customer checks now required by financial supervisoryagencies, it has become much faster and easier to registeras an auction house client. About half now do so online.

But while the online revolution may have left some

auction houses behind, for others it is generatingnew business. Auction houses used to regard the saleof smaller, cheaper objects from, for example, estateliquidations as an annoying loss-leader business that justwasted their specialists’ time. Now, however, many aremaking money selling objects for $2,000-$3,000; it’s justa matter of cutting transaction costs. “We have a new appwith which you can take a picture, push a button, and itgoes to a specialist, with a description. Then the specialistcan decide if it might fit into an auction,” says Citron.

There is some room for debate about how muchof this sort of work needs to be done internally at theauction houses, and how much should be done with moreexperienced online partners. This summer, Sotheby’sannounced a partnership with eBay, the online auctiongiant. While the details of the partnership are still beingdeveloped, it is understood eBay will distribute liveSotheby’s auctions to its global audience of 150m buyers.

Those glittering evening sales in the capital cities willnot be found on the jointly managed art and collectiblessite. Sotheby’s has never been comfortable using its brandto sell relatively cheap stuff – it is hard to maintain ahigh-end image while selling lower-priced lines. Andconcentrating on larger, more expensive works of artprovides the auctioneer with high margins in hot markets.

“This is a partnership in which [eBay] brings traffic toour auctions through its access and marketing skills,” saysBruno Vinciguerra, Sotheby’s chief operating officer. “Weare going to define and develop with it the content of oursite, and learn from its fantastic abilities and knowledge.”

From a competitive point of view, getting instantaccess to 150m customers sounds attractive. And buying,rather than building, can be the more rational choice inadopting new technology.

Murphy, though, says: “We decided years ago theway to serve the customer best, and to stop beingdisintermediated, was to pull off the trick of being aninnovator ourselves. You can’t put digital off on the side intoa different building. Anyone who does that regrets it.”

Hold the line:telephone

operators takebids during a

Sotheby’s auction W

PhOTO:AFP/g

ETTY

a taste for traditionthe resurgence ofgeorgia’s viticulturalheritage is excitingwine connoisseurs

BY maYa jaggi

20 | ft.com/wealth

n an austere sixth-century Georgian monastery in thesouth Caucasus surrounded by vineyards, bearded monkssing in soaring harmony over a hole in the ground. Anoenologist in a white cape and carrying a ceremonialsword joins in, while a Russian film crew looks on withhushed awe. The monks unseal a huge clay amphora ofnew wine, buried up to its neck, in an ancient ceremonyboth sacred and festive. Poured into plain earthenwaredrinking bowls by a brother on one knee, the amberwine has a fresh, bounteous earthiness – cause, indeed,for song.

The Alaverdi monastery in the Alazani Valley boaststhe country’s oldest workingmarani (wine hall), datingfrom the 11th century. Less than two hours’ drive fromthe Georgian capital Tbilisi, it stands in Kakheti, theeasternmost region of forested mountains and meadows,bordered by Russia and Azerbaijan, where three-quarters of Georgian wine is produced. The ancienthilltop churches and modest houses, with donkey cartsand sheep sharing the roads, might suggest rustic

neglect. But Kakheti is a window on aresurgent industry.

Georgian wine was to Russians what French wine wasto other parts of Europe. “Kakhetian and Karabakhi areworth several burgundies,” wrote Alexander Pushkin in1829. Journeying through the Caucasus, the poet notedhow Georgians kept wine in “huge jars buried in theground. These are opened with great ceremony. Recently,a Russian dragoon secretly unearthed one of these jars,fell inside and drowned in Kakhetian wine, like theunfortunate Clarence in the butt of malmsey.” The loveaffair continued in the Soviet era. In 1945, the Georgian-born Stalin toasted Churchill and Roosevelt at Yalta withhis favourite Khvanchkara semi-sweet red.

Russia is still the biggest market. Producers werestunned when Moscow banned imports of Georgianwine and mineral water in 2006, citing quality concerns.The more likely cause was rising tensions after Georgia’s2003 Rose revolution, which led to the downfall ofpresident Eduard Shevardnadze, before the 2008war over South Ossetia. The seven-year embargo was

“ourwinemaking is precious.we should take care of it,and learn to protect it”

lifted last year. Though crippling, it forced Georgianwinemakers, already adapting to the post-Soviet era,to compete for markets in Europe, the US and China.Marks and Spencer in the UK added Georgian wines toits retail list last autumn.

Georgia is rediscovering its vine-growing heritageamid rising international support for its claims to be thecradle of wine. It has the oldest continuous viticulturein the world, dating back 8,000 years. A ceramic winevessel decorated with grape motifs from about 6,000 BCwas found near the village of Shulaveri. With 525indigenous grape varieties, from Abistazh to Zerdagi,the country is also impressing global wine connoisseurswho have become jaded by growing conformity. As winelovers enthuse over dry white Rkatsiteli – one of theworld’s oldest known grape varieties – and red Saperavi,there is a tourism benefit in burgeoning wine trails.

The writer Guram Odisharia was present as cultureminister at the ceremony in Azerbaijan’s capital Bakulast December at which Georgia’s unique method ofwinemaking in a qvevri (red clay, egg-shaped jars buriedto maintain temperature) was anointed by Unesco asan intangible cultural heritage. It was Georgia’s secondsuch listing after its polyphonic choral singing (alsodemonstrated by the monks) in 2008. “We only havetwo; Azerbaijan has seven,” Odisharia notes with regret.“We’re trying to catch up with our neighbours.”

I met the then minister – now adviser to primeminister Irakli Garibashvili – shortly after theanniversary of Georgia’s declaration of independence onMay 26 1918 from Russian rule since 1801 – a freedomcurtailed by Soviet reconquest in 1921 and reclaimedonly in April 1991. After 70 years behind the IronCurtain, “we’re just learning how to communicate withthe outside world”, Odisharia tells me. “When the doorsopened, we discovered we had something we did notvalue. Our winemaking is precious and we should takecare of it, and learn to protect it.”

Preserving cultural heritage – from Tbilisi’s old townto ancient gold mines – is a source of fierce disputesin post-Soviet Georgia. Yet wine is a national

I➤ P

hOTO:AFP/G

ETTY

ft.com/wealth | 21

Sacred rituals: theproduction methodsat the sixth-centuryAlaverdi monasteryare a window on therevival of Georgia’swine industry

Feeding demand:a winery in Tbilisi.Georgian wineproduction hassurged since the

lifting last year of aseven-year Russianimport embargo

4 | ft.com/wealth

rallying cry, almost as potent as the mother tongue,and fermenting grapes is tantamount to a civil right.Many householders have amarani – less a cellar than aground-floor reception room – with qvevri in the floor.A qvevri filled at the birth of a child might be openedon his or her wedding day. In an elaborate culture offeasting and hospitality, the tamada, or toastmaster,is king. Viticulture shapes the cuisine, frommtsvadi(kebabs skewered on vine wood) to churchkhela (candle-like strings of nuts in sun-dried grape syrup that werefood for warriors). Vines thread through Georgian art,from the Dionysian cult in The Knight in the Panther’sSkin, the 12th-century national epic by Shota Rustaveli– Georgia’s Dante – to the naive-art harvest banquets ofKakheti-born painter Niko Pirosmani.

“For us Georgians, wine is not just alcohol,” saysKonstantine Natsvlishvili of the National Agency forCultural heritage Preservation of Georgia. Wine was

chosen by popular poll for the Unesco bid, which wasdelayed by the 2008 war. “The roots go deep into ourculture. It’s a basis for rituals that unite people,” saysNatsvlishvili. Some honour ancestors and, despitetheir “Christianised form”, hark back to a pagan andZoroastrian past. At funerals, wine is a “mediatorbetween the living and the dead”.

The Unesco nomination, Natsvlishvili stresses, wasfor “common people making wine for themselves – notfor retail”. Family winemakers were central to resistingcommercial threats to traditional methods fromRussian-influenced nobility and Soviet collectivisation.Winemaking came to symbolise national resistance – adefiance echoed after the 2006 Russian embargo. “Youcan’t prevent people making wine. It would be like tellingthem not to go to the cemetery to honour their ancestors.”

Though the clergy, like the nobility, was purgedby the Bolsheviks, monks helped keep the methodsalive. In Soviet times, “monasteries were destroyed”,says the worldly bishop David of Amba Alaverdi, atrained architect who heads the Georgian Patriarchate’srestoration programme. Born Irakli Makharadze inTbilisi, he became a priest in 1988. he says, in the 1960s,“the Soviet government ordered the destruction of allqvevri in the factories. Scientists were forced to say they

“the roots [of wine] go deepinto our culture. it’s a basis forrituals that unite people”

were bad. Yet the method – and people’s love of it – waspreserved. The war against qvevri as part of Georgiannational identity is still going on today.”

The bishop, aged 54, spoke to me at the GeorgianWineCulture Centre in Tbilisi’s Saburtalo district, over deep-orange, vintage wine from Alaverdi. The next day, wereconvened at the monastery in the walled compound ofthe 11th-century St George Cathedral, the tallest medievalchurch in Georgia. Damaged by battles and earthquakes,its frescoed icons, whitewashed during 19th-centuryRussian rule, are gradually being restored. The Churchand wine are intertwined, he says, because “you can’tconduct a service without wine – a symbol of Christ’sblood”. After Christianity arrived in the 4th century,monasteries were sited in land fertile for grapes, andmonks took their knowledge to the holy Land. Yet even inantiquity, he says, Georgian wine was prized as pure.

The 11th-centurymarani had 25 qvevri, each holding1,600 bottles. The bishop renovated it with help from aGeorgian-Italian company, Badagoni, and co-productionbegan in 2006. Since then 60,000 bottles have beenproduced, with five monks working there. White qvevriwine, as well as red, is made with the grape skin, stalksand pips, and is decanted several times – here, for between18 months and 12 years – making it rich in mineralsand anti-oxidants. The bishop, who recalls helping hisgrandfather make qvevri wine, aims to integrate newand old, also using oak caskets and steel vats.

In a little plot beside the cathedral, samples of anastonishing 102 grape varieties grow “like a museum”.Three years after hosting the first symposium on qvevriwinemaking, with support from USAid, the developmentagency, the monastery is to hold its first wine festivalon September 22-24, as part of the Alaverdoba harvestfestival. Up to 6,000 bottles of qvevri-only winehave been sold since 2011 to private buyers, “famousindividuals and wine lovers”, the bishop says. “We sell itas a message to the world that the monastery exists.”

Beside the mountainsbordering Dagestan, theEniseli Bagrationi winefactory is at the other endof the scale, accountingfor 5 per cent of Georgianwine production. In 2003,Sandro Bagrationi and hiswife, Mary Gomelauri,bought back a wineryestablished in 1887 by his

ancestor Zakaria Jorjadze. Its Saperavi had won goldat a show in Brussels in 1888. Confiscated in the Sovietera, the factory became a renowned source of Sovietwine and brandy, but fell into ruin in the 1990s.

The renovated 19th-centurymarani has 120 clayqvevri, each holding two tonnes. Jorjadze gatheredgrapes from peasant smallholders; Bagrationi too buysup grapes from the area (“I don’t own land – I shopand I buy”). Wine stays in the qvevri for eight monthsbefore being moved to tanks in a factory that employs70 people and makes sparkling wine and chacha(grappa). On themarani walls are first-world-warphotographs by Jorjadze’s daughter Nina, a nurse whotended English and Russian troops in Manchuria.

“Ninety per cent of my wine goes to Russia,”

ft.com/wealth | 23

Bagrationi tells me. Minor markets are in Poland,Belarus and Germany. “The embargo created a crisis,” hesays, but its lifting, he believes, has boosted the industry,while pushing up the slumped price of Saperavi grapesthreefold. he cites a national sales figure of 15m bottlesfrom the 2013 harvest – the first after the ban ended. “Insix months they sold what usually takes five years to sell.”

In Alaverdi, the bishop is as confident in his resolveto “preserve and adapt”. Despite the Russian embargo,demand held. The gap was plugged in part, he scoffs, by“Moldova producing wine using this method and callingit Georgian”.

For him, “the best weapon against counterfeit wineis to maintain quality. If you want something good, youneed to give it time.”

foR DRINKING oR INVeStING IN?

Georgian fine wines are a soundinvestment for the palate, not thepurse,writesMaya Jaggi. BruceAston, director of Aston Lovell,a London-based wine investmentcompany, says “while Georgiaproduces much good wine, and hasdone so for possibly longer thananywhere else in the world”, thereis “no investment market currentlyin these wines, and nomarketbudding”.Yet what of the future?Wine

writer Andrew Jefford thinksthe best of Georgian wines could“prove to be some of themostinfluential produced anywherearound the world over thenext decade”. A renaissancein Georgian winemakingowesmuch to investmentin improved techniquesas well as joint ventureswith foreign winemakers– some spurred bythe Russian embargoimposed in 2006 thatforced the closure ofmany wineries. JeneveWilliams, a winemakerforMarks and Spencer,feels the countryholds its place in anemerging “easternMediterranean”. Yetthe futuremay lienot only in unusualgrape varieties butin respecting ancientmethods. Partly madein 0.00, her blendwith the Georgiancompany Tbilvinoof quince-flavoured“orange wine” (left)was a surprise sell-out.

W

PhOTO:AFP/G

ETTY

temple troublesAn indiAn hindushrine is sAid tocontAin $22bn oftreAsure. but whoexActly should beits stewArd?

BY amY Kazmin

ft.com/wealth | 25

Keeper of the faith:Princess GouriParvathi Bayi inKowdiar Palace

26 | ft.com/wealth

owering above Trivandrum’s historic Fort district,Sree Padmanabhaswamy Temple is one of India’smost heavily guarded Hindu shrines. Pistol-packingKerala police, soldiers in jungle camouflage, black-clad commandos with automatic weapons, andundercover officers wearing, like the Hindu faithful,white dhotis with bare chests, vigilantly monitorapproaches to the temple complex.

Behind the thick granite perimeter walls lies thedomain of Sree Padmanabhaswamy, an 18-foot idol,who reclines upon a five-headed hooded serpent ina state described as a “conscious cosmic slumber”.For centuries, this deity, an avatar of Vishnu, wasworshipped by rulers of the erstwhile TravancoreKingdom as a protector of the world, especially oftheir lush, coastal, spice-growing region. But whathas also been discovered of late is that the still-revered Sree Padmanabhaswamy, in his blissfulrepose, is also very, very rich.

On June 30 2011, a small Supreme Court-appointed team, aided by the local fire department,gingerly entered an underground temple vaultsupposedly unopened for 150 years. They unlockedan iron grille and a heavy wooden door, thenremoved a granite slab from the floor. Beneath, fiveor six steps led to a small, dark room. The treasureinside – a hoard of jewellery and ornamentsstudded with valuable gemstones and hundreds ofkilogrammes of historic gold coins – was the stuff oflegend or Hollywood films.

“All these things were strewn and scatteredeverywhere,” recalls Justice CS Rajan, the 75-year-

old retired Kerala High Court judge who was part of theteam that entered the vault, called a kallara. “They werenot really arranged systematically. There were baskets,some earthen pots, some copper pots, and in all thesethings, these things were kept. It was a magnificentexperience. There are no words to describe it.”

For the next 12 days, the team – aided by a group ofstrong men who carried the valuables out of the vault –inventoried the treasure, weighing and examining theitems. The trove, Rajan recalls, included some 100,000historic gold coins, weighing 700kg-800kg in total,including from the Napoleonic, Mogul and Britishperiods, a legacy of the coastal region’s strong foreigntrade links. The ornaments included more than 100heavy gold chains studded with precious gemstones suchas emeralds and sapphires, rings, a crown, anklets andother traditional Indian jewellery, all on a scale, Rajansays, to adorn the larger-than-life idol.

t Estimates soon began circulating that the treasure– subsequently returned to the vault – was worth asmuch as $22bn. In reality, there has been no credibleassessment of the trove’s contemporary value. A court-appointed expert committee, led by the director-generalof India’s National Museum and with specialists inantique coins, gems and archaeology, has made a moreprofessional inventory of the temple’s other valuables,including ritual objects. So far, though, their catalogueremains a closely guarded secret, under court seal, andthe items are locked in temple vaults.

Yet many believe the historic shrine conceals greaterriches still. On the day the first vault was opened,the court team also tried to open a second, known asKallara B. However, the door, with its heavily rusted, old-fashioned lock with three levers requiring three separatekeys, was jammed shut. “It is a peculiar kind of old-timelock, and it is very much rusted,” recalls Rajan. “Theblacksmith could not open it, and we did not want tobreak open the door, being a part of the temple and all.”

Today, the question of whether to open Kallara Bto examine its contents is at the centre of a bitter andprotracted Supreme Court battle, as is the biggerquestion of exactly who should control the temple, andits priceless treasure. No one knows exactly what lies in

Guardians of theshrine: security istight at the Sree

PadmanabhaswamyTemple (opposite

top and bottom); theVarmas’ Kowdiar

Palace (right)

ft.com/wealth | 27

“the former royAl fAmily oftrAvAncore believe deAthwillvisit them if KAllArA b is opened”

Kallara B, but there are rumours of gold or silver ingots.“Perhaps there may be more; perhaps there may benothing,” says Rajan.

The Varmas, the former royal family of Travancore,now part of the modern state of Kerala, have staunchlyopposed opening the vault, citing fears it will disturb thetemple’s spiritual energy, anger the deity and bring themill fortune. “They believe death will visit them if KallaraB would be opened,” KK Venugopal, a family lawyer, toldthe judges during a Supreme Court hearing in August.“They are extremely concerned something may happento them.” The lawyer then read to the bemused judgesfrom a 1933 book on Travancore that recounted howa 1908 attempt by kingdom officials to retrieve templevaluables was suspended due to cobras in the vault,interpreted as a warning against tampering with thewealth of the deity, also known as Lord Padmanabha. ➤ P

HOTOS:REuTERS

4 | ft.com/wealth

Yet the Travancore royals are on the defensive whenit comes to the temple and its affairs. In April, GopalSubramanium, a top lawyer appointed as amicus curiae,an independent adviser to the court on SreePadmanabhaswamy Temple matters, delivered a scathingassessment of the shrine’s management, controlled forcenturies by the family. Subramanium, who spent amonth immersed at the shrine, accused the erstwhileroyals of a “large-scale breach of moral and fiduciaryduties” to Lord Padmanabha.

In his exhaustive 575-page report, he argued therewas no proper accounting of public donations received ormonies spent at the temple, nor proper records of templeassets. He also reported the startling discovery in thetemple of a “gold-sheeting machine”, whose ownership orpurpose was never satisfactorily explained, and meeting ajeweller who admitted taking 17kg of gold from the shrine.

Following this sharp criticism, the Supreme Courtordered the former royal family to hand over their keysto the temple and its vaults, severing their centuries-old role as the shrine’s main custodians. Vinod Rai, theupright former comptroller and auditor-general of India,was asked by the court to conduct a comprehensive auditof the temple and its assets for the past 25 years.

Rai has since made another revelation. In a preliminarystatus report filed this August, he said temple recordsshared with him showed Kallara B, which the royal familywanted to remain locked to preserve the shrine’s sanctity,was opened seven times in recent decades – twice in 1990

and five times in 2002. Rai’s report said silver ingots wereremoved from the vault, while some gold vessels weredeposited inside but later removed.

built in the 1930s, the 150-roomKowdiar Palace, still home to someof the former royal family, is theepitome of faded grandeur – anelegant mixture of British colonialand indigenous architecture, filledwith paintings and antiques, andbadly in need of a coat of paint.The disrepair reflects the relativehard times that have fallen on theVarmas, who once ruled one ofIndia’s most prosperous, powerful

princely kingdoms: Travancore was known for its pepperand other spices, and became a magnet for Europeanand Arab traders.

The ruling family traces its lineage as far back as800 AD to the many small princely states that flourishedalong India’s Malabar coast. It was in 1729 thatMarthanda Varma, considered the maker of modernTravancore, acceded to his ancestral throne and beganbuilding a powerful military state. While in power,he conquered and absorbed 18 small neighbouringprincipalities and established the state’s monopoly overthe pepper trade. Pepper was so crucial to Travancore’streasury that the finance minister was known as the“pepper minister”.

Marthanda Varma took another astonishing step.His family had long been faithful devotees and generouspatrons of Lord Padmanabha. But in 1750, the king, ina ceremony witnessed by his top officials and Brahminpriests, dedicated his entire kingdom and all rights overit to Lord Padmanabha, making the deity the de facto

“Almost All ruling fAmily memberson their birthdAys or AuspiciousdAys donAted to the temple”

head of state. Travancore’s rulers came to be known asPadamanabhadasa, or servants of Padmanabha, and animage of the idol’s feet was inscribed on the kingdom’scrown.

As Travancore’s fortunes rose, historians say, so did thedeity’s. Valuables looted from conquered principalitieswere placed in temple vaults. Ruling family membersand local elites donated generously to the temple and itsreigning idol. On a royal child’s first birthday, the infantwas weighed and an equivalent amount of gold presentedto the deity. “Almost all ruling family members on theirbirthdays, or on auspicious days, donated,” says ProfessorMG Shashibooshan, former director of Travancore palacemuseums. “There was friendly competition also – each ofthem wanted to donate more money.”

From 1766 until 1792, Travancore also provided refugeto around a dozen other Hindu rulers, who had fledtheir own princely states along the Malabar coast, due tofears of possible military defeat and forced conversion toIslam by Tipu Sultan, the expansionist Muslim ruler ofMysore. “They came with whatever valuables they had intheir palace – they came with their treasuries and theirchildren – and they were given a red-carpet welcome bythe Travancore ruler,” says historian TP SankarankuttyNair. “Whenever there was a birthday or marriage,they used to donate valuables, crowns, chains earringsofferings and whatnot to Lord Padmanabha.”

Many of these rulers, and their extended familymembers, also donated generously when they finallyreturned home following Tipu Sultan’s military defeatby British forces in 1792. Temple coffers were furtherenhanced by local elites, prosperous traders and others,all seeking protection. According to Prof Shashibooshan,more than 36,000 acres of land in four districts of whatis today Kerala and Tamil Nadu were even donated tothe temple.

Since the discovery of the temple’s riches, leftistscholars and politicians have argued that much of

under trAditionAl hindulAw, idols Are treAted Asliving entities who cAnownor possess property

the Travancore rulers’ wealth – which found its wayto the temple – came from onerous taxes imposed oncommon people. But Prof Shashibooshan dismissessuch claims as “cooked history,” arguing that thegovernment was “not an efficient tax collector”. It waspepper, dubbed “black gold” by the East India Company,that local historians say was the source of riches forTravancore and the kingdom’s silent, consciouslyslumbering head of state.

on a quiet residentiallane leading to thewestern entry of SreePadmanabhaswamyTemple is the homeand law office of TKAnanda Padmanabhan.His chamber dooris emblazoned withthe words “Honesty,loyalty and integrityare inborn… Can

never be inculcated.” It was here in 2007, amid devotees’growing disquiet and suspicions of contemporarypilferage of temple assets, that Padmanaban fired thefirst shots in the escalating legal battle that has engulfedthe temple.

under traditional Hindu law, idols are treated asliving entities who can own or possess property but, likeminors, they require trustees to manage their assets.Traditionally, temples, and their assets, were managed bymaharajas, who were often their greatest patrons, or byhereditary priests. But after India’s independence fromBritain, many Hindu temples were brought under Indiangovernment oversight, often at the behest of courts whendisputes arose over temple management.

Today, most Indian states have government departmentsthat manage – through appointed boards –Hindu

Historic scenes:officials appointedby the SupremeCourt enter thetemple in February2012 (opposite);Travancore in the 19thcentury – a visit by SirJames Outram of theEast India Company(below left); KowdiarPalace (below)➤P

HOTOS:REuTERS;BALAN

MADHAVAN

/ALAM

Y;CLASSIC

IMAGE

/ALAM

Y

32 | ft.com/wealth

temples, their rituals and festivals, personnel, securityand, crucially, their accounts and assets. Such oversight isintended to safeguard temple wealth, though conservativeHindu groups have accused state governments and templeboards of corruption and diverting donations intended forHindu deities to other uses.

until 2007, the temple escapedany scrutiny by the modernIndian state, as per theagreement through which thethen independent TravancoreKingdom merged withindependent India in 1949.Though other temples in thekingdom were put underoversight of the new state, SreePadmanabaswamy Temple wasrecognised as “private” under

the ruling family’s control – a tacit recognition of itshistoric connection to the shrine.

until 1991, the temple was overseen by the last realTravancore monarch, Chithira Thirunal Bala RamaVarma, who ruled for 18 years before relinquishing hispowers to merge his kingdom with democratic India.After his death in 1991, his younger brother, MarthandaVarma, then aged 69, became head of the family andLord Padmanabha’s new trustee.

Soon after the transition, devotees began expressingmisgivings about the temple’s management. Preciousitems seemed to be disappearing. Valuable templelands seemed to be changing hands. Many Trivandrum

residents were dismayed when the royal cremationground was sold to private developers. “Things starteddeteriorating,” says Padmanabhan, the attorney. “Weknew temple assets were being siphoned off. We foundsome rings were missing, lands were alienated, andwe found valuables from the temple were going out tounknown destinations.”

Doubts came to a head in 2007, after temple staffreceived a circular from the trust’s chief executive, whoanswered directly to Marthanda, notifying them that thekallaras, ostensibly locked for so long, were to be openedto photograph the items inside to prepare a catalogue.Representing two devotees, Padmanabhan obtained acourt stay on the opening on the vaults, expressing fearsthat the catalogue would be used to prepare items forcovert sale. In 2009, Padmanabhan’s uncle, a retiredofficer of the elite Indian Police Service and a deepdevotee of Lord Padmanabha, filed a lawsuit challengingthe right of the Varma family to serve as the deity’strustee in contemporary times.

In January 2011, the former royals suffered a bigsetback, when the Kerala High Court ruled they hadno hereditary right to manage the temple. The courtordered Kerala state authorities to take over the shrine’sadministration, and to make provisions to open thekallaras and inventory their contents.

Shocked, the Varmas appealed to the SupremeCourt, India’s highest court, which put a hold on thetemple’s handover to the Kerala government. But it alsoestablished the first committee to open the kallaras,paving the way for the temple’s long-guarded secrets tofinally begin spilling out into the public domain.

Princess Gouri Parvathi Bayi now 71, is the niece ofthe last maharaja of Travancore and his younger brother,Marthanda Varma, who died last December aged 91. Cladin a brightly coloured sari and still regal in her bearing,she bemoans the state of Kowdiar Palace – where shelives with her sister and some of their children andgrandchildren – but says all the family’s money is goingto lawyers’ fees to fight the battle over the temple. Giventhe ongoing proceedings, she declines to comment on thedetails but expresses anguish that the scathing report ofthe amicus curiae came out just months after the deathof her uncle, depriving him of a chance to respond toquestions raised.

The case has taken on a life of its own. With thefindings of Vinod Rai, the court-ordered opening andinventorying of Kallara B seems inevitable – and thereis fierce speculation over what it will reveal. Historicalnewspaper accounts indicate Travancore officialstook money from the temple in the 1931 during theDepression. Padmanabhan, the lawyer for devotees, isalso convinced Kallara B was opened far more often thanin the past two decades than has been officially recorded.Yet he, like many, believes “there is still more wealth”.

Meanwhile, Princess Gowri Parvathi Bayi insists herfamily, now led by her older brother, will keep fightingfor the restoration of its custodianship of the shrine itinsists it had served faithfully for centuries.

“We have no claim even to one little coin withinthe temple,” she says. “We are saying it all belongs tothe deity and to him only. We are not fighting to gaincontrol of the riches – not at all. We want our good namevindicated. This is our life. It’s not about possessions. Weare fighting for our life.”

Golden riches:Travancore’s fortunes

(below) werebuilt on the spice

trade, particularlypepper; Sree

PadmanabhaswamyTemple (opposite)

“we Knew temple Assets were beingsiphoned off. vAluAbles weregoing to unKnown destinAtions”

W PHOTO:GETTY

ft.com/wealth | 35

On the charge:BMW’s hybridsupercar, the i8(page 54)

insightGoinG to jailA SurvivAl StrAtegy forthe white-collAr criminAlwho endS up inSide

tHE tHRill oF tHE CHaSEowning A rAcehorSe cAnBe Addictive But mAKing Afortune iS not A deAd cert

FaSt but not FuRiouSthe quicK But SmoothwAy togo round A rAcingcircuit in A roAd cAr

46

50

56

photo:dreamstim

e

investingequities

Someone, at some point(i suspect during the1980s) must haveactually walked into anelevator (not a “lift”, asthe ensuing conduct isjust too un-english),

made eye contact with a seniorexecutive standing inside and said:“You don’t know me, but i have thisbrilliant business idea…”

i have always assumed this is howthe concept of the “elevator pitch”– a 10-second investment case forsomething usually technology- ormedia-related – came about.

i have never witnessed one (unlessyou count the scene in the movieWorking Girl in which harrison Fordand melanie Griffith pitch an ideato a gruff Us media baron mainlyby blocking his elevator’s doors with

their gargantuan shoulder-pads).i don’t watch Dragons’ Den, or any ofthe other reality tV shows in whichentrepreneurs must make an elevatorpitch for venture capital (ironically, inthe BBC version, after climbing to thetop floor of a warehouse building viaseveral flights of stairs).

But, of late, i rather wish i did– so that i could have some wayof comparing the pitches made toequity investors by new technologycompanies. had these been made in anelevator – rather than in a prospectusfor an initial public offering, or in asilicon Valley blog – i’m not sure theywould have got beyond the groundfloor. Consider how they would havesounded and then ask which is worth$10m, which $2.5bn and which $27bn.

a) an app that lets you ordertakeaway food on your smartphone,rather than phoning in an order – on asmartphone.

b) an app that lets you tell peoplewhat you’re thinking, and what theyshould be thinking, while also lettingall those people tell you to shut up.or worse. pithily.

c) an app that lets you send anaudio message to people saying “Yo”.on a smartphone. that’s it.

oK, so b) is meant to be twitter,which leapt to a $27bn marketcapitalisation in late July, afterreporting a 124 per cent annual rise insecond-quarter revenues, to $312m,and its first headline profit as a publiccompany. as for the other two, though,it seems hard to believe that a) fastfood app Just eat floated on theLondon stock exchange in april witha $2.5bn valuation, despite its lack ofany perceptible barriers to entry; and

c) messaging app Yo raised $1m fromtech entrepreneur moshe hogeg’s angelfund in June, giving it a valuation of$10m, despite lacking any perceptibleadditional vocabulary.

so, should your wealth managerconsider these elevated tech valuationsas a broader sell signal?

Not necessarily, says Charlottethorne, co-founding partner atCapital Generation partners, a wealthmanager. she tells me she sees nobubbles in current share prices.

“there has been an ipo boom in theUK, but apart from certain listings –mostly internet-related – there are noclear signs of froth,” she says, arguingthat today’s tech sector is very differentfrom 15 years ago. “it is important notto bundle all technology stocks underone label,” she continues.

thorne’s number-crunching putstech stock valuations today close totheir historical average, which makesthem “a bit cheaper than other sectors,particularly healthcare”. shares in theglobal technology sector, for example,trade on a forward price/earnings ratioof 15.4 times, ahead of telecoms on 14.8but well below healthcare on 16.6 times.

Within these broad sectordescriptions, investors are makingsome distinction between types oftechnology and longevity of businessmodel, thorne admits. during themarket volatility of march and april,“old tech” shares such as microsoft,intel and Cisco did not fall, whilenewer internet names sold off sharply.

so, not every new tech float sitscomfortably in a long-term portfolio.

stuart Widdowson, manager of GVoinvestment management’s strategicequity Capital trust, warns: “thehigh-growth ‘blue sky’ concept stocksin the technology sector have seen theirratings elevated to levels which havepriced in flawless delivery.”

Judging by some of the mopedsdelivering pizzas to Just eat app users,this may be a dangerous assumption.

Elevator pitch

W

Should yourwealth managerconSider theSe elevated techvaluationS aS a Sell Signal?“ “

it iS important not tobundle all technologyStockS under one label.“ “

BY matthewvincent

36 | ft.com/wealth

wealthmanagementmergers

40 | ft.com/wealth

Strength in numbers

Smaller playerS can eithergive up and Sell out orjoin bigger outfitS“ “

illustratio

n:getty

the retail diStributionreview haS made it moredifficult to make money“ “

regulation in the us with, for example,the Foreign account tax Complianceact.

the crackdown on tax avoidanceis proving costly for offshore wealthmanagers, particularly those inswitzerland, where market analysts areexpecting an increase in consolidationactivity as some business modelsbecome unprofitable.

Besides regulatory pressures,business opportunities are alsodriving the spate of mergers of wealthmanagers. Wealth management is seenas providing a steadier stream of incomefor asset managers than activities suchas investment banking.

according to figures by ComPeer,revenue from the uK wealthmanagement industry grew nearly 5 percent in 2013 to £5.4bn.

With average pre-tax profit marginsat 26 per cent, larger, well-managedfirms, can make “serious profits”, sayslysiuk.

Chris Macdonald, chief executiveof Brooks Macdonald, a wealthmanager, believes the freeing-up of theuK pensions system, in particular, isattracting players into the sector.

“Because of changes to pensions,individuals are having to look afterthemselves a lot more,” he says. “that isa very big market for wealth managersto get stuck into.”

when schroders,one of the uK’soldest assetmanagementcompanies,bought fellowCity institution

Cazenove in July 2013, the worldof finance was shocked. until then,schroders had maintained a reputationas one of the City’s more conservativefirms – not one given to blockbustertakeovers.

But while this kind of activity mayhave been uncharacteristic of schroders,it is in line with recent trends. thepace of consolidation in the wealthmanagement industry reached “feverpitch” by the end of last year, accordingto a study by scorpio Partnership, whichsays the uK was the most active countryin 2013 for merger and acquisition dealsin the sector.

industry observers attribute thelevel of M&a activity in the uK to therising cost of compliance, which ispushing firms to consolidate to achieveeconomies of scale.

“although regulatory measures havebeen stringent, numerous procedures,once in place, can be applied in auniform way,” says nikolai lysiuk,senior research analyst at ComPeer,a wealth management researchcompany, meaning that enlarged firmscan implement new regulation morecheaply.

“it makes sense to have industry-leading firms developing robustsolutions to regulatory requirementsthat can then be applied across a widerplain, thus achieving greater return forthe work done.”

the introduction of the retailDistribution review, in particular, hashad a profound impact on the industry.under rDr, anyone involved in offeringfinancial advice or managing wealth isrequired to charge clients fees upfrontfor services, rather than accepting salescommission from financial productproviders.

this regulation, implemented on 31December 2012 by the former Financial

services authority, is designed toremove the risk of advisers suggestingproducts that earn them the mostcommission, regardless of how suitablethey are for the client.

“the retail Distribution review hasmade it more difficult to make money.smaller players can either give up andsell out or join bigger outfits,” saysCara Williams, global head of wealthmanagement at Mercer, the pensionsconsultancy.

it is not just rDr that has broughtabout industry consolidation. theWealth Management association, auK industry body, reviewed more than3,000 pages of legislation in 2013 alone,for example.

Meanwhile, new europeanlegislation could introduce standardsthat go beyond those already in place inthe uK.

outside the eu, a similar pictureemerges of greater scrutiny from theauthorities. there has been increased

In 2009, BlackRock paid $13.5bn for Barclays Global Investors, the assetmanagement group,writes Patrick Ferguson. At the time, the deal pushedBlackRock’s holdings to more than $3,000bn in assets, making it the largestasset manager in the world. It was one of the biggest deals in investment fundhistory, and heralded a series of mergers and acquisitions across the industry.Over the past five years, tighter regulations have driven up costs and forced

investment fundmanagers to make a choice: stay in or get out.InMarch this year, Aberdeen Asset Management completed the acquisition

of ScottishWidows Investment Partnership from Lloyds Banking Group for£550m.Dutch bank Rabobank sold 90 per cent of its asset management arm

Robeco inMarch 2013 to Japanese financial services group Orix for ¤1.9bn.And this year, Phoenix Group, the UK’s largest closed life and pension fundconsolidator, sold Ignis Asset Management to Standard Life Investmentsfor £390m.

Joining forces: consolidation gathers pace

BY VincentManancourt

ft.com/wealth | 41

W

investmentinitial publicofferings

42 | ft.com/wealth

Markets are awashwith companiesmoving to list onthe stock market.Social networkingcompanyFacebook raised

$16bn when it launched its initialpublic offering in 2012, followingin the footsteps of General Motors’$20bn relisting in 2010. Companiesas varied as microblogging platformTwitter, Hilton Hotels, over-50s servicescompany Saga, upmarket cake shopPatisserie Valerie, video streamerNetflix and cut-price retailer Poundlandhave all listed recently. In the UK,estate agent Foxtons and propertywebsite Zoopla floated successfully andothers, ranging from Vietnam Airlinesto German online retailer Zalando,are coming to market soon. The IPOmarket is booming.

Newly floated companies can offergood investment opportunities. TheBloomberg IPO Index, which comprisesUS companies that have gone publicin the past year, jumped 64 per centlast year, the biggest rise in 14 years.And data compiled for FTWealth byDealogic show that historically theshares of companies that float tend torise significantly over the medium term.

The share prices of companies thatfloated on the London Stock Exchangeand Aim in 2004 increased by 30.9 percent in a year; in 2005, the rise was 37.9per cent. Unsurprisingly, IPOs in 2008and the following years did not do sowell (2008’s crop lost 53.8 per cent in12 months), but the good times seemto be back. The shares of companiesfloated in London in early 2013 haveappreciated 38.2 per cent. The figuresfor Nasdaq and the New York StockExchange are comparable.

Which is to be expected – IPOs

Eyes on the prizeBY jeremY hazlehurst

“give you access to companies thatare in growth mode”, says ChristianGattiker, chief strategist at private bankJulius Baer, “and they need someoneto finance that growth”. These arecompanies that want to expand, andcannot fund their plans from retainedearnings. By definition, you wouldexpect them be good investments.“When great companies come tomarket, investing in them will alwaysbe a good thing,” says Gareth Thomas,head of portfolio construction at UBS,the wealth manager. He points out thatthose who bought shares in Coca-Colaor Apple at flotation have done well.

But there’s the rub. It is not easypicking the Apples and Coca-Colas,especially now, when many of the IPOsare in the tech industries, which arefast changing and disruptive. And whilethe overall performance of companiesthat float is healthy, investing in IPOsmeans picking individual stocks (unlessyou use an exchange traded fund thatinvests in the IPOmarket as a whole).Even some companies that are abovetheir offer price, such as Facebookand Twitter, have been a rocky ride forinvestors.

There are other reasons to bewary of IPOs. “Your informationdisadvantage is much bigger comparedwith an institutional investor in anIPO situation than it is with an alreadylisted company,” says Andreas Hoepner,associate professor of finance at theICMA Centre, part of Henley BusinessSchool. He says investing in an IPO isa private equity-style investment, butyou are unlikely to be as good at duediligence as a private equity specialist.

It is also hard for non-institutionalinvestors to get shares at the IPOprice. Mouhammed Choukeir, chiefinvestment officer at Kleinwort Benson,says the gains from floated shares arelargely “theoretical” as investors oftenhave to settle for a higher price in the

says Choukeir. He says IPOs have twicethe volatility of the broad-based equitiesmarkets. The obvious implicationis that prudent investors should seesuccessful IPOs as a signal, not anopportunity. Indeed, UBS’s Thomassays: “There is no reason to believe thatIPOs will significantly outperform theequities markets.”

The FTSE and S&P indices may notoffer such superlative returns, but theydo offer security for investors.

But is that the whole story?Scepticism about IPOs is healthy – itsabsence is one sign of a bubble. Butthe bulls say that now is the time totake some risk. Julius Baer’s Gattikeris doubtful of the argument that youshould wait until a floated company isa few months down the track, callingthat tactic “driving with the rear-viewmirror”. He means that the idea a shareprice will fall after flotation is basedon the experiences of the past 10 years,rather than reasonable predictionsabout the next one or two.

If you are going to invest in equities,he says, then IPOs should be part ofthat. Otherwise, he says, “it’s like sayingyou want to be fashionable, but you arenot going to wear the latest clothes”. W

frenzied first-day of trading. Otherssuggest you should wait until thecompany has some good data in thepublic realm that can be evaluated.Anna Faelten, a researcher at London’sCass Business School who has studiedIPOs, says that after six months to ayear a company should be trading moreon fundamentals than hype, and youcan invest with your eyes open.

But are individual stocks appropriatefor your portfolio? “One of the keyingredients for a more broad-basedeconomic recovery is confidence, anda strong IPOmarket signals just that,”

a strong IPo marketsIgnals confIdence Inan economIc recovery“ “

When great comPanIes cometomarket, InvestIng In themWIll alWays be a good thIng“ “

Thinking big:Poundland (left)

floated on the stockmarket recently,following in the

footsteps of(clockwise fromabove) Netflix,

General Motorsand Zoopla

ft.com/wealth | 43

PHOTOS:BLOOM

BErG;GETTY;rOSIE

HALLAM

INVeStmeNtRacehoRSeowNeRShIP

BY STEVEMCDOWELLH

orseracing was oncecalled the sport ofkings, but with kingsin short supply, it isnowadays more likelyto be the preserve offund managers.

These men – and it is largelymen – are seeking in horseracing theadrenalin rush they found in the fast-moving careers that brought them theirriches in the first place.

But does the buzz from sitting infront of a screen taking a few pipsfrom multimillion-dollar tradesall day match the thrill of owning

a horse? And does it justify theexpenditure?

Absolutely, says David Buik, acommentator for Panmure Gordon,the brokerage and research firm, and aformer horse owner.

“I don’t have the slightest doubtin my mind,” he says, “that it is thisadrenaline buzz that attracts City typesto horse-owning.”

Many have dabbled, few havesucceeded. One who has is RobinGeffen, founder and chief executiveof Neptune Investment Management,which has more than £4bn undermanagement.

The thrill of the chase

unless youwIn areally BIG race, It’sJust PIn money really“ “

PHOTOS:GETTY;REUTERS,W

ENN,ACTIO

NIM

AGES

Oxford-educated Geffen has ownedsome spectacular horses and enjoyedgreat success in a sport he says hasenchanted him since childhood.

In a recent interview withThoroughbred Owner & Breedermagazine, Geffen said: “I have a high-pressure job and, for the first five yearsafter setting up Neptune, I had verylittle time. For me though, a day’s racingis like a week’s holiday. I’m a prettymodest operator and I work bloodyhard. But going racing is a collectivething – we get pleasure from it indifferent ways.”

The prize money for a big race ishuge. The St Leger Stakes at Doncasterthis September carries a winner’scheque of £368,000. The richestmoney in National Hunt jump racingis the Grand National with a £1mpurse and the Cheltenham Gold Cup,£550,000.

In flat racing, the Epsom Derby –the most famous of them all – has a

Stewart, the interdealer broker, in 1991,floated it in 2000 and then quit to setup Cenkos Securities – named after hismost successful steeplechaser – in 2003.

“Adrenaline is very important to theracehorse owner, because that is whatit is really about,” he says. “It’s aboutthe fun and it is a great deal of funbuying a horse because you might get agood one. There’s no parallel I can seein investment discipline and owningracehorses. After all, one is your joband the other is for leisure.”

Stewart says his greatest excitementfor the future is his purchase of SmallBuck’s – half brother to his hugelysuccessful jumper Big Buck’s.

Australian financiers have alsodipped a hoof in these waters. BruceNeill, founder of Select ManagedFunds, has a stud farm in New SouthWales and some of his horses have soldat auction for prices well in excess ofA$1m ($930,000).

Another Aussie, Lloyd J Williams –a property tycoon – has his own stableand his horses have won the MelbourneCup on four occasions.

Frankel – winner of 14 consecutivetop-ranked races, including the 2,000Guineas Stakes in 2011 by an unheard-of six lengths at Newmarket – has beendubbed the first £100m horse. Retired

to stud in 2012 and owned by SaudiPrince Khalid Abdullah – his foals sellfor millions, including a filly that made£3m at the age of three days.

Buik says: “I have had shares in 22horses in my day. Now I’m skint. I lookhard in the mirror when shaving andam utterly ashamed of myself. Anyonewith a modicum of intelligence shouldknow better.

“Yet if I had my life again, I’d do thesame. I loved every second of it. It wasnever about the gambling or the cash,but the camaraderie, the fun.” W

ft.com/wealth | 45

purse of £1.325m and the King GeorgeVI & Queen Elizabeth Stakes at RoyalAscot pays out £1m to the top handfulof racers.

“Unless you win a really big race, it’sjust pin money really,” says Buik. “Youcould say that it just goes back intoyour investment – ahem.”

This is because – never mind thecost of buying the horse – you have topay for its upkeep.

According to the Racehorse OwnersAssociation, which conducts an annualsurvey, there is considerable variationin the cost of stabling and trainingfees for race horses. This is becausesome trainers are more successful thanothers – and so are the horses.

Figures from the ROA suggestthe average for a flat horse is about£21,000 a year and for a jumphorse, £17,000. This figure includeseverything from training to vets,farriers, race entries, jockeys andtransport, which is why only the mostsuccessful can afford to run a stable.

American-born Rich Ricci, theformer right-hand man of ex-Barclayschief executive Bob Diamond, isone of the best-known characters inhorseracing and the City. A frequentrace-goer from a City backgroundfound himself standing next to Ricciat Cheltenham this year. “His horseFaugheen was running in the Neptune,and there’s this flamboyantly dressedbloke in a green shirt with his back tothe race because he couldn’t bear towatch. It won of course and it was greatto see such a big shot with such childishexcitement,” he says.

Other big players in the City includeAndy Stewart, who founded Collins

I have had shares In 22horses. now I’m skInt. ButI loved every secondof It“ “Above: RichRicci’s Faugheenbeing riddenby RubyWalsh;above left: RobinGeffen (secondfrom left) withhis horse ArcticCosmos (centre);David Buik,unrepentant manof the turf (left);Rich Ricci (farleft)

Photos:Ja

nnis

Werner(h

arvard

images)/alamy;dreamstim

e

Personal touch

philanthropynaming rights

46 | ft.com/wealth

BY Sarah MurraY

For someone from a familycalled Falik, seeking namingrights in exchange for aphilanthropic donationmight seem an odd thing todo. But Bill Falik has takenhis name and run with

it – to the bathroom. since he made a$100,000 donation to harvard lawschool in 2012, the male toilets at theschools’ Wasserstein hall have had aplaque at the entrance reading “Falikmen’s room”.

this is not just a reflection of Falik’ssense of humour. it is also an exampleof how, as the size of philanthropicgifts increases and non-profit-makingorganisations look for new ways toraise money, donors and charities arebecoming more creative in their use ofnaming rights.

For Falik, a lawyer, adjunct professorof law and property developer, the giftwas a chance to have fun with his name.and harvard is not the only place where“Falik” appears at a men’s room entrance– donations to Berkeley repertorytheatre and Berkeley law school inCalifornia came with similar namingrights. “i have a corner in men’s roomsthat are supported by significant gifts toinstitutions that i cherish,” he says.

While donors in europe tendto keep a low profile, in the Usgenerosity is often accompanied bya desire for public recognition. Forcharities, offering naming rights is anincreasingly popular way of attractinglarge donations.

“non-profits are definitely lookingat innovative ways to create namingopportunities,” says melissa Berman,president and chief executive ofrockefeller Philanthropy advisors. “it’seasy to create them even if the placedoesn’t have physical infrastructure.”

as a result, everything fromescalators and atriums to prizes, lectureseries, scholarships and professorshipsis now up for grabs.

“the mid-1990s was really therevolution,” says William drennan,a law professor at southern illinoisUniversity whose teaching topicsinclude charitable giving. “Before

Badge ofconvenience:Harvard LawSchool’sWasserstein Hall(left), home to theFalik Men’s Room

wealthy donorswanteveryone to know they’regenerous and powerFul“ “

then, the wealthy were content tomake their big donations to be on theboard of directors,” he says. “now thewealthy donor wants everyone in thecommunity to know they’re generousand powerful.”

in many cases, says drennan, tieredpricing strategies for naming rightsestablish a kind of philanthropic classsystem. if the donation required toname a building is, say, $10m, namingthe atrium might cost $5m, with astudents’ common room going for $2.5m.

But while this appetite for publicprominence provides non-profits with auseful fundraising tool, the granting ofnaming rights is not without its perils,for donors and beneficiaries. a donormay, for example, fail to deliver fundspledged. it was for this reason thatnew york’s metropolitan opera andlondon’s royal opera house removedthe name of alberto vilar, a once-prominent Cuban-american investor,from parts of their buildings (vilar waslater jailed for fraud).

the risks cut both ways. donorswho give their name to a hospital oruniversity may regret the decisionif that institution later becomesembroiled in a scandal. difficulties canalso arise if the building a donor namedmany years earlier requires a majorrenovation demanding new sources offunding. the question then arises as towhether the organisation has the rightto rename the building.

With plenty of pitfalls, laying outthe terms of naming arrangements inlegally binding agreements is critical.“it needs to be based on trust tosome extent but also on a clear andopen conversation about potentiallyunpleasant eventualities,” says Berman.

of course, such conversations arenot easy. Berman says donors oftenappoint a representative to handle thenegotiations, which can sometimesbecome uncomfortable.

For Falik, however, negotiationswith harvard law school were far fromdifficult. after elena Kagan, then theschool’s dean, happily agreed to hisnaming suggestion, he recalls that “allshe did was laugh”.

f t.com/we alth | 47

Gifts that come with naming rights tend to involve significant sums of money,writes Sarah Murray. However, a community organisation for homeless peoplein North Carolina in the US has taken a different approach – allowing benefactorsto make small donations to name everything from dental floss to bunk beds.

Urban Ministries of Durham launched the Names for Change campaign(namesforchange.org) last November, since when it has raised more than$56,000. Visitors to the website choose from more than 160 items (someshown above), and for their donation they get a certificate with an image ofthe object and their name or that of someone they want to honour.

While some of the objects – tampons or foodstuffs, for instance– can be named any number of times for a few dollars, others –such as the walk-in-freezer for the kitchen that UMD uses whenproducing meals for homeless people – require larger donationsand can only be named once.

However, as well as fundraising, the campaign’s mission is toraise awareness of the plight of homeless people and what it means togo without basic provisions. The campaign’s slogan is: “This is just stuff.Until you don’t have it.” “We wanted to find a tool to help us educate peopleon homelessness and raise money in a creative way,” says Patrice Nelson, UMD’sexecutive director. “It’s about helping people understand the essence of goingwithout basic needs.”

an oBJect lesson in commUnity giVing

culties can embroiled in a scandal. diffi also arise if the building a donor named

renovation demanding new sources of funding. the question then arises as to whether the organisation has the right

unpleasant eventualities,” says Berman.

appoint a representative to handle the

with harvard law school were far from

cant sums of money, Gifts that come with naming rights tend to involve signifiwrites Sarah Murray

in North Carolina in the US has taken a different approach – allowing benefactors oss to bunk beds. to make small donations to name everything from dental fl

(namesforchange.org) last November, since when it has raised more than $56,000. Visitors to the website choose from more than 160 items (some

cate with an image of shown above), and for their donation they get a certifithe object and their name or that of someone they want to honour.

– can be named any number of times for a few dollars, others – such as the walk-in-freezer for the kitchen that UMD uses when producing meals for homeless people – require larger donations

and can only be named once.

raise awareness of the plight of homeless people and what it means to go without basic provisions. The campaign’s slogan is: “This is just stuff.

nd a tool to help us educate people Until you don’t have it.” “We wanted to fi on homelessness and raise money in a creative way,” says Patrice Nelson, UMD’s

executive director. “It’s about helping people understand the essence of going without basic needs.”

an oBJect lesson in commUnity giVing

W

James Hipwell was notprepared for his first day inprison. “Thinking back, I wasterrified about what mighthappen on the inside – in thefabled showers, for instance –but now I realise that is what

you are supposed to think – it is part ofthe punishment.”

Hipwell served almost twomonths in prison for stock marketmanipulation in 2006 and had only

planninggoing to jail

48 | ft.com/wealth

BY RochelletoplenskY

the film The Shawshank Redemptionand Porridge, a 1970s British sitcom,as preparation. He worried how themurderers, rapists and other convictedcriminals might regard “some posh gitlike me”.

But you need not be as unpreparedas Hipwell was. There are a number ofways to ease yourself into the prisonexperience.

Vicky Pryce, an economist convictedin 2011 for perverting the course

Soft cell

it costs about the sameto send someone to etonas to keep them in prison“ “

PHoTos:Pa;geTTy

of justice after she took speedingpoints in 2003 for her then-husband,recommends you have two overarchinggoals: move to an open prison as soonas possible and keep busy.

Pryce served a quarter of her eight-month sentence in east sutton Park,an open prison for women housed ina grade II-listed, 15th-century manorhouse with 50 acres of gardens and aworking farm.

Prisoners who pose a low risk to the

public and are unlikely to escape arehoused in open prisons.

To keep herself busy, Pryce wenton daily walks, worked in the kitchen,took a class in IT, did some consultingfor the prison’s governors and attendedfaith meetings, where she was treatedto biscuits, pineapple and mango juice.

In short, she was treated more like ahuman being than an inmate.

The best advice is to not break thelaw in the first place, of course, butsometimes it is too late for that. Hereare 10 tips to help prepare for your timeon the inside of a UK prison.

1Do your research: study ThePrisons Handbook, the almost1,200-page authoritative guide to

prisons in england and Wales, editedby ex-convict and campaigner MarkLeech. get a glimpse of life on theinside by reading recent prison diariessuch as Vicky Pryce’s Prisonomics orJeffrey archer’s A Prison Diary trilogy.

“It costs about the same amountof money to send someone to eton asit does to keep them in prison – andI suppose the food is just as bad,”Pryce told the FT. (eton fees per year:£34,434; to keep someone in prison fora year: £34,766.)

2Outsource the admin: Prepayyour bills and arrange forsomeone to manage your financial

matters, as you will not be able tohandle these while inside.

3Build your skills: study somerelaxation techniques, basicself-defence and even an exercise

regime for a small space. Pilates, forexample, was developed by JosephPilates, a german, while he wasinterned in Britain during the firstworld war.

4Get a healthMOT: see yourdoctor, dentist and optometristfor a check-up. The NHs runs

the prison health service, so you willbe cared for. Hipwell suffered theembarrassment of arriving at the RoyalFree Hospital dialysis unit handcuffedto two prison officers.

her weekly magazine package, avoidingthose who would confiscate them.

Be ready to tell your back-story.Hipwell explained his crime to anarmed robber on his block. “Like allprisoners, he wanted to know what theproceeds of my crime were. I told himit was about £40,000, which was prettymuch the same as he had made offwith after going into a building societywith a sawn-off shotgun. yet he wasdoing eight years and I would be out ina couple of months. He didn’t think itwas unfair; he thought it was brilliant!”

8Yield to authority: you areno longer in charge – accept it.Things will happen at a pace

beyond your control. Life will beeasier if you do not focus on dates asmilestones because they can change.Prison moves usually happen withoutnotice to prevent prisoners planning anescape.

9Plan for your release: Releaseon tag usually entails a strictcurfew, living with someone who

has agreed to host the inmate. Pryceused her two months of tag time tohost nightly dinner parties to reconnectwith her friends and colleagues.

10Maintain relationships:according to the UKMinistry of Justice,

“Maintaining strong family ties plays asignificant role in reducing reoffending,which is why we work hard to helpoffenders preserve these relationships.”

Former prisoner Carl Cattermole,author of HM Prison Service: ASurvival Guide, writes in his bookthat only the most solid relationshipswill survive. For relationships withboyfriends and girlfriends, he writesthat breaking off a relationship andtrying to build it again after yoursentence could be a less stressfuloption.

If that is not enough advice, someentrepreneurial ex-convicts offerconsultancy services to develop apersonal prison plan.

Additional reporting by Patrick Ferguson

W

ft.com/wealth | 49

5Carry what you need to court:once sentenced, you are takenimmediately into custody, so

have everything ready with you at yoursentencing. Bring cash to supplementminuscule prison wages to pay forphone calls and buy necessities fromthe prison shop or canteen.

While phones are available, thequeues are long, costs are high andthe phone numbers you can call arelimited. Letters are the most reliableform of communication, so pens,pencils, paper, envelopes and stampsare essential. Inmates do not haveinternet access, though emails sent to aspecial prison email service are printedand delivered to inmates.

Female prisoners and some maleprisoners are entitled to wear their ownclothes, so bring comfortable shoes andtidy clothing that can be worn in layers.a cheap watch, a battery-operatedradio/alarm clock and books may alsobe allowed. Prisons have libraries, butaccess is an earned privilege and choiceis limited.

6Keep informed: arrangefor a newspaper or magazinesubscription from the prison-

approved newsagent. Books can be sentonly direct from a retailer, presumablyto prevent a friend sneaking a file ordrugs in the pages.

7Learn the game: Rules varyfrom place to place and guard toguard. Wait quietly, watch and

learn the rules. Do not be meek butremember you are no longer in control;Pryce recommends becoming one ofthe group while remaining strong. Becareful in accepting any favours, asyou may have to repay them. Prycequickly learnt which guards to ask for

be careful in acceptingany favours, as you mayhave to repay them“ “

Vicky Pryce(above, on herway to prison)advises havingtwo overarchinggoals: move to anopen prison assoon as possibleand keep busy

planninglater life

50 | ft.com/wealth

Ph

ot

o:

af

P/g

et

ty

Death and taxes, as weknow, are inevitable.But there is absolutelyno reason why theyshould be any morepainful than necessary.

We all know we aregetting older. In 2013, the house ofLords Committee on Public Serviceand Demographic Change reported thenumber of people aged over 65 livingin the UK would leap by 5m in the nexttwo decades – a 51 per cent increase –and that there would be a doubling ofthe number of people aged over 85.

for the first time, more than two-thirds of the UK population are agedover 50, and two-thirds of this number(more than 14m people) are over 60.half a million people are over 90and one in three babies born now isexpected to live beyond the age of 100.

yet, according to the office forNational Statistics, the benefit of longerlife is often offset by declining health.according to the oNS, a man retiringat the age of 65 would only be expectedto live for a further 10 years in generalgood health, while for a woman thecorresponding figure would be 11.6years. Meanwhile, 130,000 peopleenter care homes each year.

here are six simple steps youcan take to protect as much of yourlifetime’s wealth as you can and makelife easier for your loved ones when youare gone.

1Make a willIt is estimated, according toresearch from unbiased.co.uk, that

two-thirds of parents with childrenunder 18 have not got round towriting a will.

In summary, only your spouse orcivil partner can inherit – not long-term partners or ex-spouses. Next,your children, grandchildren and greatgrandchildren but no stepchildren.only in the absence of children canother relatives such as siblings inheritand even then in a strict order andaccording to the size of the estate. No

planning is the single biggest thing youcan do to protect your estate.

4The cost of carethe association of BritishInsurers calculates 75 per cent of

us will need care at some point in ourlives after the age of 65.

according to the Care of OlderPeople UKMarket Report for 2013-14 by LaingBuisson, the healthcaremarket intelligence company, theaverage cost of a place in a residentialcare home is £28,500 a year, rising tomore than £37,500 if nursing care isnecessary. Regionally this tends to bemore expensive in the more populoussouth. In southeast england andLondon it rises to well over £825 aweek, or £42,900 a year.

Currently, if your assets are worthmore than £23,250 you are not entitledto state support and even if you doqualify it is highly unlikely this willcover the whole cost of your care.

as stories of children selling parents’homes to pay fees are now common,the government has placed this underreview and is examining proposalswhere everyone who is able to do sopays the first £72,000 of their carecosts. the government says it wantsto cap care costs at £75,000 from2017. Whether it can afford to do so isanother matter.

5Cash poor, asset richonce you have found the righthome, you have to work out the

best way to pay for it. the options are:• With benefits – you may be entitled tomore than you think.• With investments – make sure allyour paper investments are properlyaligned to create the largest amountof income without damaging theunderlying capital.• With pension – can be complex,but probably best done with incomedrawdown, which is generally availableto all types of pension except finalsalary schemes. this option, whichdoes run the danger of exhausting a

BY SteveMcDowell

The final reckoningfriends, causes or charities you mayfavour can benefit.

In the absence of children andrelatives it all goes to the state.

2Power of attorneyMost people have more moneythan they think – with policies

that pay out on death or a “death inservice clause” and/or a workplacepension – but making a will is notjust about money. after we are gonethere is a lot to be done – much of ittedious administration, so you willwant to appoint someone you trust asyour executor. this should be a trustedfamily member or friend. you cannominate a legal guardian for yourchildren and express your wishes fora funeral.

Most importantly, once you haveappointed your executor you shouldarrange power of attorney for themso that should you become so ill orelderly that you cannot make your ownfinancial decisions – from paying billsto selling your home – they can takethem for you.

3Inheritance taxBenjamin franklin’s muchoverused quote that only two

things are certain in life – death andtaxes – becomes doubly true in the caseof the dreaded inheritance tax, becauseyou get taxed for actually being dead.

If your estate is worth more than£325,000 – including your home,assets, investments and chattels( jewellery, art collections and so on)– 40 per cent of everything above thatfigure will go to the taxman unless youleave your entire estate to your spouse.

the good news is there are manyways of mitigating the tax bill,especially if you start to do so at leastseven years before your death withallowable gifts that the taxman callspotentially exempt transfers.

With inflation it is likely your housealone will take you over the threshold,so you should seek proper advice froma professional as there is no doubt Iht

the average cost of aresidential care homeplace is £28,500 a year“ “

“ “

pension pot in some circumstances, isalso under review by the government.• With property – this means releasingcapital from your home with anequity release plan. equity releasehas not always enjoyed the best ofreputations, but these days there areestablished firms that are regulatedby the financial Conduct authorityand subscribe to the equity ReleaseCouncil’s standards.• With an investment bond –specifically a long-term care annuity.Investment bonds are exempt fromthe means test, provided, say the rules,the bond was acquired specifically forlegitimate investment purposes andnot in anticipation of a request for localauthority support.

6To the gravea 2013 report by market researchcompany Mintel from a sample of

funeral directors revealed the averageUK funeral cost was almost £3,500,up a staggering 80 per cent on prices10 years previously. It makes sense topre-pay funeral costs with any one of anumber of funeral plans available. thisalso protects your loved ones from costinflation and helps ease some of thepain of their grief.

finally, after you die your executorwill have to acquire probate before heor she can distribute your assets. thisinvolves three phases:• Collecting the information about allof the assets and debts of the deceased.• Preparing the statutory tax returns andthe application to the probate registryfor the legal authority to administer theestate (the grant of probate).• gathering in the assets, paying debtsand expenses, and distributing theestate to beneficiaries.

It can be complicated, so you canmake life easier for your executorand your beneficiaries by keepingevery relevant document in a singleplace along with any usernames andpasswords an executor may need toaccess your online accounts. W

book reviewThe new classconflicT

BY daniel Ben-ami

Any serious attemptto understand theUS’s current impasseby moving outsidethe conventionalframework should bewelcome. The stale

pairings of liberal and conservative,right and left, no longer cut it.

Joel Kotkin, an American academicand author, has come up with theunlikely proposal of understanding thecountry’s predicament in terms of classconflict. But his conception is a worldaway from the old socialist notion of acombative proletariat battling againstan intransigent ruling class. Instead,his is an innovative attempt to rethinkthe main contours of US society.

For a start, he sees the Americanelite as split between two mutuallyantagonistic oligarchies. On oneside is a new elite based largely oninformation technology, althoughwith substantial support fromWall Street. On the other is the oldplutocracy centred on sectors such asagribusiness, construction, energy andmanufacturing.

The new oligarchy differs from theold in important ways. Its technologywing is concentrated in and around SanFrancisco, with a secondary cluster inSeattle, and it employs far fewer peoplethan traditional industries. Kotkinestimates that in 2013 the leading socialmedia companies together directlyemployed fewer than 60,000 peoplein the US. By contrast, GM employed200,000, Ford 164,000 and Exxonmore than 100,000. The differentnature of technology firms, with farless dependence on cheap energy, helpsexplain why they are predisposed togreen thinking. They also tend to beboth geographically and emotionallydistant frommiddle America.

Meanwhile, the financial sector,which has traditionally favoured

A tale of two oligarchies

52 | fT.com/wealTh

the Republicans, has benefited fromenormous government largesse. Thisincludes federal bail-outs, cheap moneyand low interest rates. As a result, ithas become more amenable to theprogressive causes usually associatedwith the Democrats.

These new oligarchs are in alliancewith what Kotkin calls the clerisy. Thisis the burgeoning class of technicalspecialists ensconced in government,law firms, the media and foundations.The technical class has swollen inline with the increased role of thestate. Almost instinctively, the clerisyadvocates increased regulation as thesolution to any problem it encounters.

Together, the tech oligarchs and theclerisy tend to favour what Kotkin callsgentry liberalism. This outlook has analmost aristocratic disdain for the massprosperity that long characterised theUS. It typically favours sustainabilityover economic growth. It dismissesthe suburbs in which most Americanschoose to live as ugly “sprawl”.

The yeomanry – the class of smallbusiness owners – is the big loser inthis new arrangement. Not only are itsmembers being squeezed by offshoring,globalisation and technology, butexcessive government regulations areundermining their livelihoods. Therestrictions so beloved by the clerisy arebreaking the traditional backbone ofUS prosperity.

Kotkin believes the new oligarchyand the clerisy together provide BarackObama’s support base. Although thepresident often rails against excessiveinequality, he has widespread backingfrom the ultra-wealthy of Silicon Valleyand Wall Street. His predilection forgovernment regulation also sits well

“Like Skynet in the Terminator movie series, the techoligarchs can be said to have achieved ‘self-consciousness’,and recognise their ability to influence the public andthe political class.”

The quoTe

the ever-increAsing roleoF government isonly pArt oF the story“ “

with the interests and outlook of theclerisy.

Kotkin does not advocatesupporting the Republicans as analternative. Their ties to the oldplutocracy are transparent. Meanwhile,self-proclaimed progressives railagainst the excesses of the “1 per cent”while disenfranchising the middle andworking class from popular prosperity.

His solution is for a renewedemphasis on broad-based economicgrowth. This means shiftinggovernment priorities away fromlavish pensions and benefits towardsinvestment in physical infrastructure.It involves greater emphasis oneducation and training, with particularattention to adult learning. Kotkin alsoadvocates a resurgence of blue collarindustry and the creation of new homesand businesses on the periphery ofmetropolitan regions.

Although his framework is superiorto the platitudes of liberals versusconservatives, it has weaknesses.It does not sufficiently explain whyan elitist technocratic outlook hassuch a grip on American life. Theever-increasing role of governmentis only part of the story. Nor does heacknowledge how many leaders intraditional industries, not just the techoligarchs, have embraced notions suchas sustainability.

But in having the courage to junkthe old nostrums, he has taken animportant step forward. The challengeis for others to go even further.

The New Class Conflict, by Joel Kotkin(Telos, 2014) $29.95The reviewer is the author of Ferrarisfor All (Policy Press 2012)

Redistributionof wealth:althoughPresidentObama railsagainst excessiveinequality, hehas widespreadbacking fromthe ultra-wealthy ofSilicon Valleyand Wall Street

fT.com/wealTh | 53

W

PHOTO:cORBIS

Supercars are supposedto have big engines andplenty of power, as wellas plenty of excess thatmirrors their high pricesand exclusivity.

BMW’s i8 is a boldstride in the opposite direction. Fora start, it has a tiny three-cylinder1.5-litre engine, albeit turbocharged,that puts out just 231 horsepower. Thei8 is also a plug-in electric hybrid ata time when such cars are associatedwith being responsible and sensible.Neither of those concepts are happybedfellows with the bad-boy, excessiveimage desired by makers of supercars.

car reviewbmw i8

54 | ft.com/wealth

BY rohit jaggi Electric or hybrid vehicles representthe future. Not just because to supplytheir fuel they use batteries, which areless energy-intensive than petrol butclean at point of use, but more becausethey allow the architecture of vehiclesto be re-examined.

BMW has done just that withthe i8. And the German carmaker ison to a winner if it can be the first,essentially, into a new genre of cleanand responsible supercars.

The mechanical underpinningsof the car’s claim for this crown arecertainly clever. That small petrolengine is at the back, driving the rearwheels through a six-speed automatic

transmission, with manual control viapaddles behind the steering wheel.Then there’s a 131hp electric motor thatdrives the front wheels through its owntwo-speed auto box. Either can drivethe car on its own and when they worktogether, the car’s computers makesure they co-operate with each otherrather than fighting – with 320 Newtonmetres of torque at the back and 250at the front, they need to have someprotocols for their joint sovereignty.

A 96-cell lithium-ion battery pack,which can be charged from the mains,by the petrol motor or by regenerativebraking, sits low in the backbone of analuminium chassis. That is topped by

Electric blue

it iS the way the wholepackage of motorS workSthat provideS the thrillS“ “

a body made from carbon-reinforcedcomposite, allowing for a reversal ofthe trend in recent years for even sportscars to put on large amounts of weight.

On its own, the electric motor canpropel the car at up to 75mph. On afull charge, the batteries can take thecar about 23 miles – not remarkablefigures, but it is the way they interweavewith the ability of the petrol motor, and

is plenty of acceleration for safeovertaking and enough feedbackthrough the steering wheel to makecorners entertaining. Stiffenedsuspension in sport mode makes theride a trifle harsh on poor surfaces,but that seems a small price to pay forknowing what all the wheels are doing.

Top speed is limited to 155mph,but just as important are the aids thatcome as standard, such as the stabilitycontrol systems, a head-up displayand a satellite navigation system thatco-operates with the hybrid system tooffer the most efficient outing.

Charging the batteries from themains – empty to 80 per cent takesthree hours, or two with BMW’sfast-charge system fitted to yourhome – means, according to thecarmaker, that the i8 can achieve134.5 miles per gallon. Usingperformance that turned out to behighly addictive as well as entertaining,I did closer to 40mpg without muchrestraint on use of the throttle.

Of course, the wonderful thingabout hybrids is that they can refuelfrom both wall sockets and fuelpumps. Generally, sales of all-electriccars have been disappointing, in part

because buyers fear being lockedinto relying on public

chargers that are stillwoefully rare. The i8sidesteps that issueand adds performanceand supercar style

to the mix in a cocktailthat is working so far – the first year’sproduction has sold out.

Change is coming fast. In theconservative world of motorbikes,Harley-Davidson, that arch-traditionalist, has just launched a fleetof all-electric bikes for considerationby customers. Perhaps the biggestpraise for BMW’s i8 is that it is ahighly entertaining supercar that canbe used every day, with a relativelyclear environmental conscience,and – if it matters – little in the wayof running costs. That is the sortof performance that will attractcustomers and, possibly, change theimage of sportscars. W

ft.com/wealth | 55

the way the whole package works, thatprovides the thrills.

In fact, the thrills start beforeyou push the on button. Verticallyopening doors are a gimmickbut provide plenty of wow factorto match that furnished by theswoopy body and its electric-bluehighlights.

Inside the cabin, the rear seats aregood for little more than carryingbags or small children, but the rest isairy and spacious, even if the lit blueaccents do smack of 1980s futurism.

The car will waft away on a touch ofthrottle and no engine sound, propelledonly by batteries and the electric motor.

But when you want a bit more spiritand engagement, the i8 can provide it.The combined 570Nm of torque gives0-62mph acceleration of 4.4 seconds,and the petrol engine sounds likesomething far more potent than just1,500cc spread across three cylinders.

Charging across the sparselypopulated Scottish Highlands, there

vertically opeNiNg doorSare a gimmick BUt providepleNty of wow-factor“ “

Swooping lines:even a little1980s futurismcannot detractfrom the i8’ssupercar looks

StatSPETROL ENGINE:

1.5-litre turbothree-cylinder,231bhp, 320Nmof torqueELECTRIC

MOTOR: 96kW,250Nm oftorqueTOP SPEED:

155mphACCELERATION:

0-62mph in 4.4secondsPRICE: from£99,895

View a video of Rohit Jaggidriving the BMW i8 at

ft.com/i8 and a slideshowat ft.com/wealth

lIfeStYleRohIt JaGGI

56 | ft.com/wealth

is supposed to be both consistent andinch-perfect on the fastest line arounda track.

Driving a car fast on a race circuitis all about exploring the limits ofadhesion. Acceleration, braking andcornering all put different stresseson the tyres’ ability to grip the roadsurface. It is similar to the way onerides a motorcycle on track, which Iammore familiar with, although theconsequences of misjudging inputs arenot so severe on four wheels.

Recently at Brands Hatch circuitin Kent I was riding a Kawasaki NinjaZX-10R 1,000cc supersports road bikewhen I pushed a bit too hard exiting thelong curving right-hander Clearways atabout 120mph. I wound on too muchthrottle for the rear tyre’s ability to gripand the back end slid wide enough forme to start picking the least frighteningpart of the trackside to crash into. HadI snapped the throttle shut, as instinctscreamed at me to do, the rear tyrewould have gripped and the bike wouldhave spat me off. Fortunately, intellecttook over from instinct and I kept thepower on, exiting the curve with therear spinning and sliding but the bike –generally – in control.

With all this in mindI climb into one of

Silverstone’s track-prepared RenaultMeganes. Aninstructor firstshows me roundthe unfamiliartrack, then weswap over, and

it was a plan beguiling in its utilityand charming in its simplicity. Itstarted from the thesis that cars havebecome so capable that exploringtheir limits on the road involvestoo much speed and cutting safetymargins until they are too slim.Driver aids such as traction control

and anti-lock brakes improve safety butwhittle away at basic skills and thus,for me, the enjoyment of a difficult jobdone well. There is also a more complexissue of all those stability aids flatteringdrivers until they provoke the laws ofphysics into biting back more violentlyat higher speeds.

For raw satisfaction, then, the trackis the place to go. But track days ina road car can become boring quitequickly, so why not go straight to racing?

Racing takes many forms, but thecommon factors tend to be huge andunpredictable costs, plus significantdifficulty in knowing where to start.

Fortunately, there are a few easyways of tackling these drawbacks. One isoffered by the small UK carmakerGinetta. For just under £30,000 (plusVAT) it will sell you one of its G40 ClubCars – a road-legal car prepared for itssingle-make racing series.

All I need to do is gain a racinglicence. The sport’s governing body inthe UK is the Motor Sports Association,which regulates testing and trainingby Association of Racing DriversSchools members. The Ards test, as it iscalled, allows those who pass to race innational-level races.

Having duly signed up for the test atSilverstone Motorsport Academy, Iturn up at the Northamptonshirecircuit, one of the mostchallenging tracks in thecountry. The test involves awritten element, mostly onthe flags and lights used bymarshals, and a practicalassessment in which one

over the course of a couple more shorttrack sessions he coaches me on theperfect racing lines through corners.

The aim is to brake before turning,take the fastest line by using all ofthe track from edge to apex to edgewhile exploiting all the lateral gripavailable, and get on the power as earlyas possible while straightening up,correcting any slides arising from over-enthusiasm along the way. One veteraninstructor, Brian Svenson, makes itsound easy: “You go from kerb to kerbto kerb – simple.”

But here my perfectly formed planunravels slightly. The lines are verydifferent from the ones I’ve used togood effect on big bikes, where thetechnique is to square off any corner:charge in, turn fast, then get on the gasas soon as possible. It turns out mostpeople prepare hard for the Ards testwith lots of coaching and lots of tracktime. I have done zero preparation so,not surprisingly, my lines slightly lackthe inch-perfect precision demanded.

We all decide I should do some moretrack time in a car – which leads to amorning at Brands Hatch in a GinettaG40. With an 1,800cc, 165 bhp Fordengine it is not overpowered. But therear-wheel drive, cramped cockpit,five-point racing harness, unassistedsteering, and high levels of noise makeit feel like a proper racing beast.

It rewards smoothness, too, anddespite my needing to keep out of theway of some ferociously fast racing carsthat are also on the track, the examinerfromMotor Sport Vision, owner ofBrands Hatch, is more than satisfied Ihave my lines down pat, consistently.

With that, the plan is back upand running. Once some paperworkis complete, I will have a shiny newnational racing licence. Track time isnever wasted, so more practice in a G40would be good. But other than that, thenext step is on to the racing grid.

Fast but not furious

driving a Car faSt around atraCk iS all about eXploringtHe limitS of adHeSion“ “

W

PHOTOGRAPHSBY CHARLIE BIBBY,JENNY SOUTH ANDGARRY FULLER

ft.com/wealth | 57

SvenSonmakeS it SoundeaSy: ‘you go from kerbto kerb to kerb – Simple’“ “

Day at the races:a track-prepared RenaultMegane (top right) is the

ideal way to learn the twistand turns of Silverstone,

while the committed racercan own a Ginetta G40

(right and bottom left) forless than £30,000

View a video of Rohit Jaggitrying out the G40 Club

Car at ft.com/racing and aslideshow at ft.com/wealth

58 | ft.com/wealth

photo:tom

Lahat

the businessguruofrastrauss

Everyone needs a mentor

W

BY attractamooneY

who worked in our dairy was arab orJewish, always a mixed population ofworkers. It was a challenge, but wewere able to create a very respectfulatmosphere that was inclusive. We stillhave that today. I really believe that we,the business people of the region, canplay a very important role to changewhat you see in our region today. I ama part of an organisation called BtI,which is business people, palestiniansand Israelis, who really believe we canreach the moment of peace.

“after my grandmother started thebusiness, she was part of a professionalwomen’s group. they used to meetin the living room of [their] homesand talk about the challenges of beingprofessional women. this is still anissue today.

“I head Jasmine, [a group where wetry to address] the different needs thatfemale-owned businesses in Israel have.the unique thing about Jasmine is thatit is for both arab and Jewish womenwho own businesses.

“my career has been about bigbusinesses. But through Jasmine I gotnew glasses to look at the world andsaw what small and medium-sizedbusinesses mean for the economy.I believe small and medium-sizedbusinesses are critical for innovation,for growth. Sometimes people from theoutside world – young people – look atthe business world and think it soundslike somewhere for people who havespecific talents, like financial skills. Butin the business world, there is a placefor every type of talent. It is a greatplace to influence the world, to growand be yourself.

“my career advice is to have patience.It takes time to really knowwhat ourpassion is and where our talents lie. atthe age of 18 or 20 or 25, do we reallyhave the feeling that this is it? Notnecessarily. It’s often a few years later. Ittakes those 10 years to really knowwhowe are and what we want to do.”

Ofra Strauss is thechairwoman ofStrauss Group, anIsraeli food companyfounded by hergrandparents. Shejoined the business

in 1989, after a stint at Estée Lauder,and became chief executive in 1996.

Under Strauss’s watch, the grouphas acquired stakes in businesses acrossthe world, including Brazilian coffeecompany 3 Corações, US foodmakerSabra and publicly listed Elite, as wellas embarking on joint ventures withfirms such as Lavazza, the Italian coffeecompany. Strauss Group, which hasbeen publicly listed since 2003, hadrevenues of $2.23bn in 2013.

“[Working at Estée Lauder] reallyinfluenced the way I think in business[and] the way I work. [Former EstéeLauder chief executive] Leonard Lauderis still my mentor today. over the past25 years, I have met him two, threeor four times a year and I have alwaysprepared myself, bringing questions thatreally bother me.

“Lately I feel I am trained by myson – who is in the start-up world – intechnology. Just sitting next to him,asking questions and seeing how hethinks, I am being mentored by him.Every person needs to look for a mentor.they don’t need to be official. theycan be at home or in your businessenvironment and they don’t need tohave the experience you necessarilyexpect in mentors. But make sure youhave them.

“I finished law school, but I neverpractised law. But there is somethingabout learning in law school that reallyopens your mind to everything. Whenyou have a challenge, you have to thinkabout what you can learn from othercases. It trains your mind to think aboutwhat happens around you and then goback to your own issue. University –education as a whole – is important, but

the most important thing when you goand study is just to allow your [mind]to be open.

“For as long as I can remember,security has been part of managingour business. [We have experienced]factories under fire, supply chainsthat are uncertain – you have thisuncertainty whether the ports will beopen – and managers and employeeswho are called for service [in the Israeliarmy]. We are trained to work nomatter what.

“our business really started in thenorth [of Israel] where the Jewish andarab populations are mixed. Everyone

in the business wOrld,there is a place fOrevery type Of talent“ “