Sotheby’s has closed a deal, previously announced this summer, for Abu Dhabi’s sovereign wealth fund and investment company, ADQ, to acquire a minority stake in the auction house. ADQ, along with the family of telecoms tycoon Patrick Drahi, the auction house’s billionaire owner, bought newly-issued shares of the company worth $1 billion.
While the exact terms of the deal—or the company’s new valuation—were not disclosed, a Sotheby’s spokesperson said that $800 million of the cash injection has been earmarked for paying down the auction house’s $1.65 billion long-term debt. The remainder of the money will be used to bolster its aggressive expansion plans, both in terms of real estate in the US and abroad, and the development of new markets and revenue streams.
Sotheby’s annual first-half results, revealed by the Financial Times in September, showed that the auction house’s core earnings dropped 88 percent in the first half of 2024 with auction sales down by 25 percent. (According to the company, the bondholders’ report is limited to the auctions and doesn’t include other parts of our business like Sotheby’s Financial Services.) But Sotheby’s isn’t the only auction house facing difficulties. In July, Christie’s announced a similar drop in auction sales, around 23 percent, for the first half of 2024 compared to the second half of 2023.
In June, S&P Global Ratings dropped Sotheby’s credit rating down to B-, a rating that puts the company in “deep junk” territory.
In 2023, Sotheby’s reported consolidated sales of $7.8 billion with sales in the first half of this year totaling $3.2 billion, about 20 percent less from last year.
Meanwhile, Sotheby’s last month opened the doors to its new Parisian headquarters on 83 Rue du Faubourg Saint-Honoré and, in July, planted a flag in the Asian market with a luxe flagship Maison in Hong Kong. The house is expected to close on a deal for the Breuer building on Madison Avenue, the former home of the Whitney Museum of American Art, by the end of the year.
According to a press release from Sotheby’s, the money will also help the auction house build “an even stronger presence in the Middle East, as Abu Dhabi continues to strengthen its arts and culture offerings domestically” and enhance the Sotheby’s experience for clients.
“This investment comes at a perfect time as we see our markets firming and moving towards growth,” Sotheby’s CEO Charles Stewart said in a press release. “We have made significant investments over the last five years, and this $1 billion puts us in a totally differentiated capital position to win in our markets and support our innovation and growth agenda at the same time.”
According to the auction house the investment comes with three seats of the Sotheby’s board of directors. The Drahi/ADQ investment is, the house says, the largest in the global art market since Drahi bought Sotheby’s in 2019 for $3.7 billion.
