The state fund ADQ from Abu Dhabi has announced that it is acquiring a minority stake in Sotheby’s. This investment is being made through newly issued shares as part of a capital increase of 1 billion US dollars. The main purpose of this financial injection is to reduce debt and support the growth and innovation plans of the renowned auction house. Patrick Drahi, the majority shareholder of Sotheby’s, will also inject additional funds and retain his majority stake. However, no valuation of the company was provided in the announcement.
Patrick Drahi, who acquired the auction house in 2019 for $3.7 billion including debt, has made a turnaround. Initially, Drahi saw no need for external investors. However, the decision to bring a partner on board reflects the growing pressure Drahi is facing due to his financial obligations.
Sotheby’s, which is part of Drahi’s personal wealth portfolio, is currently facing financial challenges. In June, S&P Global Ratings downgraded the auction house's credit rating to B- and cited "depressed profitability and ongoing EBITDA decline.” At the end of last year, the parent company Bidfair reported long-term debts amounting to 3.5 billion US dollars, according to corporate documents in Luxembourg.
The commitment of ADQ, a state fund established in 2018 to advance the development of the oil-rich Emirate of Abu Dhabi, reflects the growing importance of buyers from the Gulf states in the international art market. An insider reported that the investment could potentially lead to the opening of a Sotheby’s location in Abu Dhabi. The Emirate has already invested heavily in art and culture, with the opening of the Louvre Abu Dhabi in 2017 and the commencement of construction on a Guggenheim gallery.
Drahi has recently started selling off assets to reduce his debt. Most recently, he sold a majority stake in his French data center business and agreed to sell the French news channel BFM and the radio station RMC to billionaire Rodolphe Saadé. The sale of Portugal Telecom has been pending for over a year, but so far without success.
ADQ's investment in Sotheby's shows that Drahi is now relying on external support to untangle his financial web and position the auction house for future growth.
