Hedge fund manager Alexander Klabin buys stake in Sotheby’s financing arm

Alexander Klabin Courtesy of Sotheby's

The US hedge fund manager Alexander Klabin has invested in Sotheby's and will become the executive chairman of its internal art financing business, Sothebys Financial Services (SFS), the auction house announced today.

In this new role, Klabin will help build and lead an expanded executive management team within SFS, which was established around 30 years ago. The auction house did not disclose terms of Klabin's investment but says he will lead a management team to help Sotheby's "modernise" its underwriting process and improve its access to capital markets.

“Alex shares our vision of expanding the financing solutions we can offer to our clients and leveraging technology more effectively to develop new financial products for collectors,” Sothebys chief executive Charles F. Stewart says in a statement. “This partnership will enhance our ability to provide clients with state-of-the-art capital solutions and responsive and comprehensive client service.”

Following Sothebys $3.7bn sale to the French-Israeli media and telecom entrepreneur Patrick Drahi last year, Klabin was reportedly among a handful of investors who were approached by four former Sothebys shareholders to back a competing offer in an attempt to block Drahis deal, which officially took the publicly traded firm private once it was finalised.

Klabin left Senator Investment Group, the $6.9bn hedge-fund firm he co-founded 12 years ago, in February after his relationship with his business partner, Douglas Silverman, allegedly grew strained. His new independent firm, Ancient, will launch in 2021.

“Im excited to partner with the talented Sothebys team to accelerate the future of authenticated asset-based finance,” Klabin says in a statement. “Sothebys is a special company that sits at the centre of culture and commerce. Its proprietary data, specialised knowledge and global relationships put it in an advantaged position to offer its clients a broad range of flexible financing solutions and services tailored to their bespoke needs.”

Even as a minority stake, Klabins investment may indeed be welcome for the 275-year-old auction house. Sotheby's global sales have totalled $2.5bn so far this year, down 26% from $3.3bn over the same seven-month period in 2019, largely due to the cancellation of live auctions due to the coronavirus pandemic. According to Sothebys 2019 annual report, the auction house reported a net loss of $71.2m last year, representing a $179.8m decrease year-on-year largely attributable to lower consignment levels in its Impressionist, Modern and Contemporary Art sales in London, caused, in part, by Brexit-related uncertainties.

The firm has seen several executive leadership switches and structural shifts since it went private in Read More – Source