Sotheby’s partners with Alexander Klabin to expand art-backed lending

Sotheby’s announced on Tuesday, September 23, that it has entered into a partnership with Alexander Klabin, co-founder of the multi-billion-dollar hedge fund Senator Investment Group, in a move aimed at accelerating the growth of Sotheby’s Financial Services (SFS), the auction house’s unit that has offered art-backed financing for 30 years.

Klabin, who has made an undisclosed financial investment in Sotheby’s, will take on the role of executive chairman of SFS, where he will lead and expand its management team. The combination of his experience in finance with his passion for art makes him, according to the auction house, a natural choice for this role.

Klabin’s name is not unknown to Sotheby’s. He had been part of the investor group that last year tried to buy the auction house — the New York Post described him at the time as a “low-profile investor in his 40s” — before Sotheby’s was sold to billionaire Patrick Drahi for $3.7 billion and returned to being a private company.

SFS is considered among Sotheby’s most profitable businesses. The unit lends to consignors ahead of auctions or accepts artworks as collateral; loans typically reach up to half of the artwork’s market value. In case of default, the auction house can sell the work, earning double its investment plus the relevant fees.

Charles Stewart, chief executive of Sotheby’s, declared that Klabin “shares our vision to expand the financing solutions we offer clients.” Klabin himself described Sotheby’s as “a special company that stands at the center of culture and commerce.”

Klabin is also known as a collector of contemporary art, with works by Jasper Johns, Yves Klein, Gerhard Richter, Brice Marden, Philip Guston and Roy Lichtenstein, and has often served as guarantor for third parties at all three major auction houses. He left Senator Investment Group this year after a “rift” with co-founder Douglas Silverman; the fund manages over $10 billion in assets.

Source: Artnet News