Abu Dhabi’s ADQ acquires minority stake in Sotheby’s amid art market challenges

Abu Dhabi has officially acquired a minority stake in Sotheby’s. Two months after Sotheby’s announced plans to sell a minority share in its business to ADQ, an Abu Dhabi sovereign wealth fund, the auction house has confirmed that the deal has been finalized.

“They are coming on board as equity shareholders with a long-term investment perspective, which is precisely the kind of partnership we were seeking,” stated Charles Stewart, Sotheby’s CEO. Patrick Drahi, the telecommunications billionaire who owns the auction house, has also contributed additional funds and maintains his majority ownership. With ADQ’s investment, the total cash infusion into the business amounts to approximately $1 billion.

Sotheby’s will establish a board of eight directors plus the CEO; ADQ will hold three of the nine seats. When asked if these three seats are proportionate to ADQ’s investment, Stewart confirmed, “yes,” but he declined to provide further details. A representative from ADQ chose not to comment.

ADQ’s investment comes at a challenging time for the auction house, which, like the rest of the art market, is facing a prolonged downturn. In June, S&P Global Ratings downgraded Sotheby’s credit rating and expressed concerns about the company’s ability to refinance its debt. This was followed by reports from Puck and the Wall Street Journal alleging that Sotheby’s was experiencing overall financial instability. Stewart countered much of this reporting but did not specifically address individual claims, stating, “There’s a lot of misleading information.”

Last year, the company reported consolidated sales of $7.8 billion. According to a company spokesperson, its sales for the first half of 2024 totaled $3.2 billion, representing a 20% decline compared to the previous year—similar to rival auction house Christie’s, which saw a 22% drop during the same period. Currently, Sotheby’s owns over $1 billion in real estate assets, as reported by the spokesperson.

Drahi took Sotheby’s private in 2019 for $3.7 billion, using approximately $1.1 billion in debt for the acquisition, according to Bloomberg. Since then, Sotheby’s has reported that its luxury revenue has doubled, increasing from 15% of its net revenue to 26%, while private sales revenue—art transactions brokered discreetly by the auction house—has risen by 40%, from 9% to 12% of its net revenue.

Last month, Bloomberg reported that Sotheby’s would allocate much of ADQ’s investment to reduce its debt, with a spokesperson clarifying that around $800 million of the funds would be used to pay down about $1.65 billion in fixed debt. “The majority of it will go toward debt reduction,” Stewart said, adding that this investment “completely resets our balance sheet and transforms it into a source of strength.”

Looking ahead, a key issue is the future of the Breuer building. The auction house announced in June 2023 that it would purchase the landmark former home of the Whitney Museum of American Art on Madison Avenue in Manhattan for approximately $100 million. However, Sotheby’s has yet to finalize the acquisition, which is intended to become its New York headquarters. Stewart indicated that the deal is expected to close imminently.

As for the future, Stewart remarked that ADQ’s investment reflects “our collective confidence among our shareholders”—especially among the executive team—in the opportunities directly and indirectly associated with the Middle East, suggesting that the investment could signify potential expansion into the region. “That’s one of several exciting opportunities that this investment will help nurture and promote.”