Abu Dhabi-based sovereign wealth fund ADQ is to take a stake in Sotheby’s as part of a $1bn capital injection alongside existing owner Patrick Drahi as the auction house seeks to cut debt and fund growth.
ADQ and Sotheby’s said in a joint statement on Friday that the investment fund had “signed a definitive agreement” to buy a minority stake via newly issued shares.
The cash will be used to “reduce leverage and support the company’s growth and innovation plans,” they said, adding that Drahi would also put in additional money and remain Sotheby’s majority owner. The parties did not provide a valuation for the company.
Drahi acquired Sotheby’s in 2019 in a deal that valued the auction house at $3.7bn, including debt. That the Franco-Israeli entrepreneur is now willing to accept a partner represents a change in position from what people close to him said in December, namely that he did not need to sell nor bring in outside investors.
The bulk of Drahi’s holdings are in telecoms and owned by his Altice group, although Sotheby’s sits in his personal holding company.
In June, S&P Global Ratings cut the auction house’s credit rating to B minus from B, citing “pressured profitability and continued Ebitda decline.” The agency highlighted “potential refinancing risk” given Sotheby’s “elevated leverage.”
