Recap Tycoon Tabalov Sets Up Kiev Auction House as Art Demand Surges : Yazzy's at www.williamverdult.com

This is an undated handout photo, released to the media on Friday, Jan. 18, 2008, of Alexander Tabalov. Source: Tabalov via Bloomberg News

According to Bloomberg News  Alexander Tabalov sits back in a leather chair in his Kiev office an hour after organizing an art auction, and reflects on business opportunities in Ukraine.

Tabalov owns more than 200 19th-century and early 20th- century paintings and is the latest big collector to emerge in Eastern Europe. He follows billionaire Victor Pinchuk, who owns at least seven Damien Hirst works which he put on show last year.

Ukraine's art market has ``a lot of potential and is already showing rapid growth,'' says Tabalov, who estimates it has 100 ``serious'' buyers. The dark-haired food tycoon, 50, wears a dark suit and no tie. ``With real estate booming, people need to put something on the wall, and many understand it makes financial sense to have fine art because its value will only increase,'' he says in a soft voice.

Ukraine's $106 billion economy grew for the eighth consecutive year in 2007, increasing by a preliminary 7.3 percent. The expansion has created a new affluent class in the country of 47 million people bordering the European Union.

``Like many in the Soviet Union, my parents couldn't afford genuine works of fine art,'' Tabalov says in an interview. ``The walls of my childhood home only had reproductions of famous Russian and Ukrainian 19th century paintings.''

He earlier poured Remy Martin cognac for guests at a party and said his first purchase, in 1996, was an Ivan Aivazovsky seascape for $18,000. That amount was enough to buy an entire factory at a time when the average annual worker's salary was $80, Tabalov said.

Red Dress

He now has pictures by Levitan, Makovsky, Repin, Goncharova, Konchalovsky, Larionov, and Somov. His favorite artist is the impressionist Konstantin Korovin. Tabalov has about a dozen works by the painter including ``Portrait of a Lady in a Red Dress,'' purchased at Sotheby's London in May 2006 for 176,000 pounds ($344,000) on a top presale estimate of 200,000 pounds.

Tabalov's passion for art has been paid for by profits from his Kirovograd-based food-processing business Formula Corp. He says the holding company owns farms, 18 bakeries and 500 food shops: ``We have about 10 percent of the national bread market. That means 5 million Ukrainians eat the bread I make.''

In a December 2007 sale by his auction house Art Kapital, the top lot was Piotr Konchalovsky's ``Rowan Berries on Blue'' (1947), which sold for $506,000, including the 10 percent buyer's premium, on a $460,000 estimate. It previously sold in 2005 at Sotheby's, London, for 48,000 pounds.

`Lively Scene'

``Kiev has a lively art scene, of which the Tabalov auction house already has a leading role,'' said William MacDougall, director of the London-based auction house MacDougall Arts Ltd. ``Kiev continues to be the second-most-important market for Russian art after Moscow.''

Art Kapital is the only one of about 10 auction houses in Kiev to have its own building, bought by Tabalov downtown.

``We want Art Kapital to be a serious, full-fledged auction house,'' said Tabalov. ``There will be a number of art departments, as well legal services, logistics and storage.''

Tabalov said he has been buying at Christie's International's and Sotheby's Russian art sales since 1999, and hasn't missed one yet.

At Sotheby's April New York sale of Russian art, his son, Sergey, 22, Art Kapital's general director, went home with a number of works, including the two top lots, which set records for their artists at auction. Mikhail Nesterov's ``Vision of St. Sergius, When a Child'' (1922), sold for $4.3 million and Konstantin Makovsky's ``Happy Arcadia'' (1890), sold for $3.4 million, almost three times its top estimate.

``Half of Sergey's purchases were for me, and half for his clients,'' said Tabalov.