Louvre Seeks Money Managers for U.S.-Style Endowment (Update1)

By Farah Nayeri


Jan. 20 (Bloomberg) -- Eighteen banks, including UBS AG and JPMorgan Chase & Co., are competing for money-management business from an elderly, refined first-time client -- the Louvre.
The Paris museum, which opened to the public in 1793, says it is starting a U.S.-style endowment next month with the 175 million euros ($230 million) it received to set up an Abu Dhabi offshoot. It will get an additional 250 million euros from the Gulf emirate between now and 2027.

The funds will be managed by one of the competing banks, not spent. The Louvre, the first French museum to establish an endowment, will use the money to improve access, build a storage and conservation center, renovate its Greek and Roman art wing and open new sections. The timing, planned for the first half of this year, isn’t ideal: The MSCI World Index of shares fell more than 40 percent in 2008 as stock markets collapsed.

“It will not be as easy as we thought two or three years ago,” says Didier Selles, the museum’s general administrator, whose spacious office overlooks the Seine.

“The idea is to avoid dilapidating this capital,” says the dark-suited Selles, 50. “The government has let us put the money in an endowment because it knows that, ultimately, it will need to contribute less to Louvre projects.”

Splitting Costs
Every year, the Louvre raises as much as it gets from the state, or 122 million euros. The government pays for running costs: salaries, safety and maintenance. The rest -- new wings, refurbishments, acquisitions -- is for the museum to fund.
Since President Henri Loyrette took over in 2001, the Louvre has been scouting for outside money. Like his U.S. counterparts, Loyrette spends half of his time fundraising, according to Selles, and has traveled to the Gulf states more than a dozen times. His sponsorship staff has grown sixfold since Loyrette arrived.

The millions raised by the Louvre will soon be funneled into an endowment that the 18 banks are jostling to manage. A member of UBS’s wealth-management team in Paris confirmed that UBS is among the bidders.
“It’s important to us, because it’s a new entity, an endowment that doesn’t exist yet, and we like to play a pioneering role,” says Bruno Borricand, a managing director at JPMorgan’s private bank in Paris, another contender. “We manage money for a number of foundations all over the world. It’s logical for us to want to participate in this management opportunity here in France.”

Seeking Patrons
Based on an average annual return of 5.5 percent, which the Louvre is aiming for, the endowment today would yield some 10 million euros a year. The museum aims to fill the pot with another 5 million euros to 10 million euros a year in donations to draw even higher returns. “We need to find patrons interested in attaching their name to the long-term financing of the Louvre Museum,” says Selles.
The investment guidelines will be determined by a committee of unpaid advisers, who may include investment strategists or U.S. philanthropy experts, and approved by the endowment’s board and its director, to be named later this year.

“I’m sure many banks would be keen to build a long-term relationship with a prestigious name like that,” says Phil Irvine, a director at London-based PiRho Investment Consulting, which advises pension funds, endowments and institutional investors on where to put their money. “I wouldn’t underestimate organizations’ desire to win accounts in this tough environment.”

Yearly Return
Irvine says an average yearly return of 5.5 percent “should be achievable,” though given that this is “the worst bear market for risk assets we’ve seen for decades,” the portfolios are “likely to have a bond flavor” -- meaning they would be geared toward government bonds.

In the past few years, the Louvre has received 5.5 million euros from Atlanta’s High Museum of Art for a three-year loan of artworks, and 17 million euros from Saudi Prince Al-Waleed bin Talal for its new Islamic-art wing. Total SA has donated 11.5 million euros for the Islamic-art section, the refurbishment of a room and the acquisition of a Poussin painting.
A further 3 million euros to 5 million euros a year are raised by the Louvre from exhibitions it curates for other museums; the host museum gets the ticket money. Examples last year included “Napoleon and the Louvre” in Beijing and “Roman Art From the Louvre” in three U.S. cities (Indianapolis, Seattle and Oklahoma City).

Abu Dhabi
The museum’s new moneymaking projects, particularly the Abu Dhabi venture, have sparked art-world protests and petitions, led by Didier Rykner, an art historian and author who runs the Web site La Tribune de l’Art (http://www.thearttribune.com in English.)
Selles, an ex-engineer at the French atomic-energy commission, is an occasional target of the barbs. The Louvre’s second-in-command is a graduate of three elite French schools, including the Ecole Nationale d’Administration, which many presidents and prime ministers have attended. He is forever seeking fresh ways to run the museum and meet its funding needs.

He and Loyrette adopted the endowment idea when U.S. patrons suggested it. Selles, who traveled to the Gulf for 12 months, persuaded the government of Abu Dhabi to pay a first tranche in April 2007 that would serve as the endowment’s startup money. France last August legalized endowments at its institutions, including the Louvre.

The Louvre’s directors already are developing the projects to be financed by the new funds. Architect I.M. Pei, who designed the glass pyramid and expanded the Louvre two decades ago, has drawn up a new maquette to enlarge the museum’s public spaces, which were designed to accommodate 5 million visitors a year, not the record 8.5 million who came last year. The cost may total as much as 70 million euros.

To prevent basement storerooms from being flooded by the nearby Seine River, the Louvre will co-fund a storage, research, restoration and conservation center in the Paris suburbs. That’s set to open in 2013, and may cost some 250 million euros. Other museums -- the Musee d’Orsay, the Pompidou Center, the Musee des Arts Decoratifs -- will share the cost, and the center.