Abu Dhabi fund to acquire stake in Sotheby’s in $1 billion move

Abu Dhabi fund ADQ will acquire a stake in Sotheby’s in a deal that will see about $1 billion invested in the flagship auction house.

The sovereign wealth fund will acquire newly issued shares to reduce leverage and bolster the company’s growth plans, a statement said on Friday.

French telecoms tycoon Patrick Drahi, who acquired Sotheby’s in 2019, will inject additional capital into the company alongside ADQ, and will remain the majority owner. The total investment amount is estimated to be around $1 billion.

Sotheby's parent company Bidfair is reported to have long-term debts of about $3.5bn as of last year. In June, ratings agency S&P cut the auction house’s credit rating to B minus from B, citing “pressured profitability".

The deal comes at a time when many major bidders and collectors at Sotheby's global auctions have ties to the Gulf states.

“This marquee investment will support Sotheby’s in delivering its ambitious growth agenda while accelerating its expansion into new markets, including establishing an even more robust presence in the Middle East, as Abu Dhabi continues to strengthen its arts and culture offering domestically,” the statement added.

“Our investment underscores our firm belief in the enduring value of Sotheby’s brand, market-leading platform and the ability of its management to execute on their growth agenda,” Hamad Al Hammadi, ADQ’s deputy group chief executive, said.

"We look forward to creating new collaboration opportunities with Sotheby’s and being a part of its journey", he added.

ADQ, which has a broad portfolio of investments spanning sectors such as energy, utilities, food and agriculture, health care, life sciences, technology, mobility and logistics, is boosting its domestic and global footprint.

In April, it announced that it would be acquiring a stake in Australia's Plenary Group, marking its entry into the Asia-Pacific's fifth-biggest economy and boosting its portfolio in the public infrastructure sector globally.

In the same month, it consolidated its assets in the life sciences sector to create a new holding company that aims to focus on improving the quality and longevity of human life.

In February, it led a consortium that will invest $35 billion in major projects in Egypt. ADQ said it would acquire the development rights for Ras El Hekma, a coastal region about 350km north-west of Cairo, for $24 billion.

The investment agreement announced on Friday is pending customary approvals and is expected to be finalised before the year's end.

“The additional capital and investment expertise will enable us to accelerate our strategic initiatives, expand our commitment to excellence in the art and luxury markets, and continue to innovate to better serve our clients around the world,” Charles Stewart, Sotheby’s chief executive, said.