ADQ to acquire minority stake in Sotheby's in a USD 1 bn transaction

Abu Dhabi’s sovereign wealth fund ADQ will acquire a minority stake in the UK’s Sotheby’s in a USD 1 bn investment alongside b’naire Patrick Drahi, who also committed capital to retain his majority stake, an ADQ press release reads. The transaction — expected to close by year end — is meant to trim Sotheby’s debts and drive its global growth, particularly in the Middle East, according to the statement.

The details: ADQ will acquire newly issued Sotheby’s shares, with telecom bn’aire Drahi — who bought Sotheby’s for USD 3.7 bn in 2019 — committing capital to retain his majority stake. A Sotheby’s spokesperson confirmed that ADQ will provide the majority of the investment, Bloomberg reports.

ADQ’s venture in fine arts: The state investor’s stake could open the door for a Sotheby’s branch in Abu Dhabi, complementing the emirate’s efforts to enhance its art and culture scene, according to an ADQ spokesperson, the Financial Times writes.

A change of heart: The partnership with ADQ marks a shift for Drahi, who previously resisted bringing in outside investors. Drahi’s decision to bring in outside investors to help manage Sotheby's likely comes as the bn’aire’s holding company Altice group faces mounting debt, the salmon-colored paper writes.

The fine arts collector is in the red: Sotheby’s has been under financial strain, with its parent company Bidfair reporting USD 3.5 bn in long-term debt as of the end of last year. In 2023, the auction house's revenue dropped to USD 1.36 bn from USD 1.4 bn in 2022. Interest expenses also rose, reaching USD 267 mn compared to USD 218 mn the previous year. This financial pressure led S&P Global Ratings to downgrade Sotheby’s credit rating to B minus, citing declining profitability and elevated leverage.