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In June, S&P Global Ratings downgraded the auction house’s credit rating from B to B, citing “pressure on profitability and continued decline in EBITDA”. Given Sotheby’s “high leverage”, the agency highlighted “potential refinancing risks”. In addition, the auction house did not disclose its half-year results for the first time this year and declined to comment. According to company documents filed in Luxembourg, Sotheby’s parent company Bidfair had $3.5 billion in long-term debt at the end of last year. In 2023, the Luxembourg-based parent company reported interest expenses of $267 million, up from $218 million a year ago. Revenue in 2023 fell to $1.36 billion from $1.4 billion in the previous year due to lower auction service revenue and lower inventory sales.
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“ADQ remains committed to exploring attractive investment opportunities that will create value for Abu Dhabi,” he explained Hamad Hammadi, Deputy CEO of ADQ Group – Our investment underscores our strong belief in the enduring value of the Sotheby’s brand, its market-leading platform and its management’s ability to deliver on its growth agenda. We look forward to creating new opportunities with Sotheby’s and being part of its journey. ” The fund’s participation reflects the growing number of wealthy buyers of art and collectibles from the oil-rich Gulf states. Since the beginning of the year, Doha and Dubai have hosted several auctions of modern and contemporary Oriental art, photography, watches, jewellery, handbags and carpets.
The sovereign wealth fund was established in 2018 with a mission to boost development in the oil-rich emirate of Abu Dhabi. It is chaired by the powerful United Arab Emirates’ national security adviser. H.H. Sheikh Tahnoun bin Zayed Al Nahyan, ADQ is also investing abroad, announcing earlier this year plans to invest $35 billion in Egypt.
Sotheby’s share does not fall within ADQ’s priority sectors, which include energy, agriculture, healthcare and logistics. However, a person close to the fund said it could lead to Sotheby’s opening an agency in Abu Dhabi, which has invested heavily in bringing art and culture to the UAE. In addition, the city is very active in the arts, just remember that in 2017 the Louvre Abu Dhabi was inaugurated and the Guggenheim Museum began construction.
From Sotheby’s CEO Charles F. Stewart“We applaud their long-term vision for our business and this investment is a testament to our achievements to date and our tremendous growth potential ahead,” added . “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.”
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