James Murdoch in 2008
James Murdochs private investment company Lupa Systems is to become the new anchor shareholder in Art Basels parent company MCH Group as part of a restructuring to help the struggling Swiss events company overcome the damaging financial consequences of the coronavirus crisis.
The New York and Mumbai-based Lupa Systems was founded by the media scion, son of Rupert Murdoch, only last year with the intention of building an investment portfolio of entertainment and media companies—it has already invested in several firms such as Vice Media, Tribeca Enterprises and AWA Studios. Lupa is expected to hold around a third of shares in MCH (between 30%-44%) and has already signed a 15-year relationship agreement with a five-year lock-in, which contains a commitment to keeping MCH Groups headquarters in Basel during that period, as well as continuing to run Art Basel in Basel.
Murdoch says in a statement:"MCH Groups long history of innovation for customers, civic commitment to economic and cultural life, and deep investment in its platforms and communities make for a long-term business that can grow, invest, and flourish.” The implications of the new investor for Art Basel are as yet unclear but Murdoch does have art interests—he is a director of the Dia Art Foundation and was formerly a director of Sothebys.
Rumours that Rupert Murdoch is involved in the deal have been firmly rebutted by his spokesman who tells The Art Newspaper, "he is not involved in this deal in any way and has never been".
MCHs board of directors will propose Lupa Systems at an Extraordinary General Meeting (EGM) on 3 August, alongside proposing a capital increase of CHF104.5m (around $100m, achieved via theconversion of a CHF30m loan from the Canton of Basel-Stadt and a cash capital increase of CHF74.5m) and a restructuring of the firms debt—the Canton of Basel-Land and the Basler Kantonalbank have extended the repayment of their CHF35m and CHF40m loans by five years.
This set of measures is “urgently needed to overcome the effects of the corona crisis” with the aim of developing “classic exhibition and event formats into future-oriented platforms and communities and to strengthen the market position of MCH Group and Art Basel in Switzerland and internationally," a statement says.
Lupa Systems will underwrite the subscription of the new shares (at CHF10.50 each) and will buy any that are not subscribed by other shareholders, hence its shares will range between 30% and 44%. The discounted share price, which is 25% lower than usual, reflects “the drastic drop in sales this year and the continuing uncertainty of the Covic-19 pandemic,” MCH says.