Abu Dhabi sovereign wealth fund will acquire a minority stake in Sotheby's
EUR 1 billion transaction with a capital increase, bringing in Abu Dhabi ADQ. Drahi grapples with debt, retains majority
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Key points
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Abu Dhabi's sovereign wealth fund ADQ is entering with a minority stake in Sotheby's through a capital increase that will be used by the auction house to reduce debt, further strengthen its balance sheet and fund growth plans. Bidfair, owned by Patrick Drahi, who acquired Sotheby's in 2019 in a deal that valued the auction house at $3.7 billion, including debt - marking its return to private ownership after 31 years -, will also invest additional capital along with Adq and remain majority owner of Sotheby's. All in all, a note specifies, this is a EUR 1 billion transaction, which is expected to be completed before the end of the year.
Thus, Drahi will remain the auction house's majority shareholder while ADQ buys newly issued shares to 'reduce leverage' and support 'growth and innovation'. Drahi will also invest additional capital in Sotheby's as part of the deal.
Under pressure
.That Drahi was looking for fresh capital had been known since 2021. Last year, the Financial Times reported that another Gulf sovereign wealth fund, the Qatar Investment Authority, was among the candidates engaged in informal talks to acquire a minority stake in the auction house. The pressure that high interest rates put on Drahi's heavily indebted business empire, built on substantial loans and complex financing mechanisms in the age of cheap money, is well documented. Altice, the multinational telecommunications company he founded and of which he remains the controlling shareholder, is under pressure from a reported debt of $60 billion. Many subsidiaries have been sold in the past year.
The fact that the Franco-Israeli entrepreneur is now willing to accept a partner represents a change of position from what people close to him said in December, namely that he did not need to sell or attract outside investors.
Most of Drahi's holdings are in the telecommunications sector and are owned by his Altice group, although Sotheby's is part of his personal holding company Bidfair.
