Art + Culture

When will Nathan Drahi from Sotheby’s get out of Hong Kong? Patrick Drahi’s Extremely Capitalistic Way of Art Dealing And Speculating With Sotheby’s

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As a veteran artist in Japan, with quite idealistic opinions, it makes more and more difficult for me to agree with the actual tendencies of the global art world.
Two examples:

1) I am against the so-called “NFT works” by digital illustrators, like Beeple, to be recognised as art works, put into the canon of art history.
Check:
#USABS U.S. ARTY BULL SHIT. NFTデジタル・アーティスト ビープル:「美術史の流れを変えたい」や「悪役である」というメリット
#USABS。NFT Digital Artist Beeple: “I want to change the course of art history” and the merit of “being the bad guy”
https://art-culture.world/articles/nft-beeple-digital-artist-ビープル/

2) Every auctioneer applauded when Christie’s and Sotheby’s became private enterprises, so a more long-term strategy, not quarterly results, would benefit everyone involved.
At the moment, Christie’s Pinault’s engagements as a collector should be applauded. Showing his marvellous collection in different places around Europe is a win-win situation for all of us art lovers.

Check this out:
フランソワ・ピノーの三番目の刺激的な現代美術館、再建築 by 安藤忠雄
Exciting 3rd Contemporary Art Museum for François Pinault, rebuild by ANDO Tadao
https://art-culture.world/articles/francois-pinault-art-museum/

原口典之と関根伸夫のアート実践を考える
Thoughts on the artistic practice of HARAGUCHI Noriyuki and SEKINE Nobuo
https://art-culture.world/articles/haraguchi-noriyuki-sekine-nobuo-原口典之-関根伸夫/

現代美術コレクター、兼オークションハウス・クリスティーズ社長フランソワ・ピノー氏のコレクション展 in モナコ公国
Contemporary Art Collector, Christie’s Auction House Owner François Pinault Shows His Collection In The Principality of Monaco
https://art-culture.world/articles/pinault-collection-ピノー・コレクション/

However, Patrick Drahi demonstrated that he doesn’t like art. What a shame. A disaster for the Asian art market, too, with his amateurish, spoilt son Nathan Drahi, who is the wrong person in Hong Kong’s Sotheby’s.

Check this out:
Sotheby’s Harsh Reshuffle: After Amy Cappellazzo and Kevin Ching, Next Prominent Figure TERASE Yuki Bites the Dust
サザビーズのコンテンポラリーアート部門アジア地区部長・寺瀬由紀氏を巡って
https://art-culture.world/articles/terase-yuki-寺瀬由紀/

Next One @ Sotheby’s: Hugely Popular Amy Cappellazzo Bites the Dust
What will happen @ Sotheby’s Japan?
https://art-culture.world/articles/amy-cappellazzo/

アジアのアートマーケットの中心的人物:26歳のネイサン ドライ氏、新CEO サザビーズアジア (サザビーズのオーナー パトリック・ドライの息子)
Key Person of Asia’s Art Market: 26 Years Old Nathan Drahi, New CEO Sotheby’s Asia (Son of Sotheby’s Owner Patrick Drahi)
https://art-culture.world/articles/key-person-of-asia-art-market/

French-Israeli telecoms billionaire Patrick Drahi has selected Goldman Sachs and Morgan Stanley to pursue the IPO for around 5 billion US Dollars.
Check:
https://www.theartnewspaper.com/2022/01/13/sothebys-selects-banks-initial-public-offering-five-billion

Means, Drahi would make a profit of around 1.3 billion US Dollars in just 3 years. Let’s say it bluntly: we artists feel annoyed, we’re just being fucked by the Drahi’s family.
I really hope, that young and unsympathetic Nathan Drahi will part from Hong Kong as soon as possible.

Up-date 2022/12/8:

Sotheby’s Chairman Patti Wong, Who Ushered House’s Growth in Asia, To Depart
ANGELICA VILLA, December 7, 2022
https://www.artnews.com/art-news/news/sothebys-international-chairman-patti-wong-to-depart-1234649457/


up-date 2024/4/25

GMBVnO8XYAE19FM
So maybe bringing it to Hong Kong did the trick. Sold at auction in Vienna for €30m to Patti Wong & Associates on behalf of a Hong Kong collector

Source_https://twitter.com/enidtsui/status/1783519602871263457/photo/1

(End of up-date)


Up-date 2023/8/11

screenshot from pr haifa
screenshot from pr haifa

Billionaire Drahi vows speedy asset sales to cut debt at Altice
August 8, 2023
Summary
– Altice France pledges to do “whatever it takes” to cut debt
– Mentions sale of non-core assets, such as data centres
– Aims to raise about 3 billion euros – Drahi
– Partnerships, cash from other businesses among options – Drahi

PARIS, Aug 8 – French-Israeli billionaire Patrick Drahi vowed on Tuesday to slash debts at Altice France, home to the country’s second-biggest telecoms operator, by selling assets within a year.
Drahi, under pressure after his right-hand man was arrested over allegations of corruption, is striving to boost creditors’ confidence in the financial reliability of his sprawling media-to-cable empire, whose combined debts total $60 billion.
At Altice France, one the three separate entities composing the Altice group, falling sales and core operating profits in the second quarter have added to the concerns, with net debt rising close to 24 billion euros ($26 billion).
Assets will be sold within Altice France or outside France to repay debt, Drahi told investors on a conference call.
“(The aims is) to raise, one way or another, 3 billion (euros) of equity, plus or minus,” Drahi said.

“We have lots of options: one, is asset disposals, bringing cash; two, lot of people are calling to be partners with us; and three, bringing cash from our other businesses,” Drahi added, as analysts pressed him to provide details on the deleveraging plan.
Altice France’s net leverage ratio at end of June was 6.3 times its yearly core operating profits.
There are active discussions for the potential sale of Altice France’s date centres, senior adviser Dennis Okhuijsen said on the same call, adding he was confident about giving an update on potential sales during third quarter results.

In its second quarter earnings presentation on Tuesday, Altice France, home to France’s second-biggest telecoms firm SFR, said it would do “whatever it takes” to reduce leverage.
Altice France’s net debt was close to 24 billion euros at the end of June, up from 23.6 billion at end of March, the group said.
It posted a 5.7% fall in core operating profits in the second quarter. Total earnings before interest, tax, depreciation and amortisation (EBITDA) fell to 1.02 billion euros from 1.08 billion euros a year earlier. Total revenues fell by 2.6% to 2.77 billion euros.

Drahi told investors on Monday he felt “shocked” and “betrayed” by an ongoing corruption probe at its Portuguese unit Altice Portugal
Altice’s co-founder Armando Pereira was placed under house arrest in Portugal last month while an investigation is conducted. Pereira has denied any wrongdoing.
($1 = 0.9141 euros)
https://www.reuters.com/business/media-telecom/billionaire-drahi-vows-speedy-asset-sales-cut-debt-altice-2023-08-08/


Factbox: A breakdown of Patrick Drahi’s $60 billion debt at Altice
August 8, 2023
PARIS, Aug 8 – French-Israeli billionaire Patrick Drahi is facing renewed questions over the $60 billion pile of debt that allowed him to build his media and telecoms empire, after a corruption probe targeting his most trusted lieutenant shook his Altice group.
Spread across three separate entities, all controlled by Drahi, parts of the debt will soon have to be refinanced and maturities extended in the context of rising interest rates.
The debt burden is distributed as follows:
ALTICE INTERNATIONAL: net debt of 8.6 billion euros ($9.45 billion) at end of June.
* The smallest of the three Altice group entities is home to Portugal’s biggest telecoms firm and has a net leverage ratio of 4.8 times core operating profits.
* The unit is at the centre of a corruption probe in Portugal which led to right-hand man and Altice co-founder Armando Pereira being placed under house arrest last month.
* Altice International faces large maturities starting in 2025 and amounting to 2.13 billion euros in 2027 alone.
* Moody’s, which cut Altice International’s long-term debt rating to B3 from B2 in June, said last month that the probe created “uncertainty that is likely to affect investors’ confidence” as the group faces close to 800 million euros of debt repayment in 2025.
* S&P revised its outlook on the entity from negative to stable in April after Altice International posted “solid” growth in sales and core operating profits.
ALTICE FRANCE: net debt of 23.9 billion euros ($26.17 billion) at end of June.
* Home to France’s second-biggest telecoms firm SFR, Altice France’s debt reflects net leverage of 6.3 times the entity’s yearly core operating profits.
* The next sizable repayment is due in 2025, with 1.64 billion euros worth of secured bonds and secured loans.
* The biggest maturities are due from 2027, starting with 5.4 billion euros of repayments and peaking at 9 billion euros the year after.
* S&P and Moody’s both recently downgraded Altice France’s long-term debt rating, respectively to B- and B3 within the speculative range, citing the higher cost of refinancing in a context of rising interest rates and a weaker than expected operating performance.
ALTICE USA: consolidated net debt of $24.5 billion at end of June
* The New York-listed Altice entity has the highest net leverage ratio of the three, at 6.8 times its core operating profits at end of June.
* The next sizable maturity is due in 2025 with $1.6 billion worth of debt to be repaid then, before the $6 billion and $5.4 billion of repayments due in 2027 and 2028 respectively.
* S&P downgraded Altice USA’s long-term debt rating three times in less than a year, lastly to B from B+ in March. The credit rating firm warned it could lower the rating further if the net leverage ratio rose above 7 times core operating profits or if free operating cash flow turned negative.
https://www.reuters.com/business/media-telecom/breakdown-patrick-drahis-60-billion-debt-altice-2023-08-08/

up-date 2024/3/5

What’s Another $25 Billion on $100 Billion of Debt?
A potential deal between Charter and Altice USA would create a highly leveraged cable player. But the alternatives for both firms could be worse.
March 5, 2024
An ambitious deal may be brewing in the US cable industry, creating a behemoth carrying nearly $125 billion of debt. If Spectrum Internet owner Charter Communications Inc. wants to formalize a takeover of billionaire Patrick Drahi’s Altice USA Inc., it needs to be sure the benefits are worth the considerable financial stretch. The dilemma is that passing on a transaction carries risks of a different kind.
Charter’s stock and bond investors reacted nervously last month when Bloomberg News reported that management was weighing an offer for the US slice of Drahi’s telecoms empire. The company already carries nearly $100 billion of net debt. Its main shareholder is Liberty Broadband Corp., a vehicle of cable tycoon John Malone, himself no stranger to leverage.
more @
https://www.bloomberg.com/opinion/articles/2024-03-05/drahi-s-altice-and-charter-cable-deal-may-be-worth-the-debt?

2024/4/10 up-date:

Financial engineering to dig into the pocket change and reduce debt cost!

Sotheby’s, the auction house owned by telecom billionaire Patrick Drahi, plans to borrow about $500 million through bonds backed by personal loans made to art collectors

By Charles E Williams and Carmen Arroyo
Bloomberg, April 9, 2024

Sotheby’s Plans $500 Million Bond Sale Secured by Art, Collectibles

– Barclays may start premarketing process as soon as Wednesday
– More issuers have been pursuing niche types of securitizations

Sotheby’s, the auction house owned by telecom billionaire Patrick Drahi, plans to borrow about $500 million through bonds backed by personal loans made to art collectors.
Barclays Plc is the sole structuring agent of the asset-backed security and may start premarketing the deal as soon as Wednesday, according to people with knowledge of the matter. BNP Paribas SA and Morgan Stanley are also joint leads on the transaction, according to a company filing.
more @
https://www.bloomberg.com/news/articles/2024-04-09/patrick-drahi-s-auction-house-sotheby-s-plans-securitized-bond-sale

Billionaire Drahi Leaves Creditors Flummoxed With His ‘Bully-Boy’ Moves

Drahi risks burning bridges with creditors, who over decades bankrolled his debt-fueled empire-building, creating one of Europe’s most leveraged companies.

By Benoit Berthelot and Irene Garcia Perez
Bloomberg, April 10, 2024

Patrick Drahi was uncharacteristically chatty on that mild March day at the headquarters of his flagship company Altice France in the south of Paris. The tycoon had just agreed to sell his media operations to fellow French billionaire Rodolphe Saadé for €1.55 billion ($1.68 billion), and was bidding adieu to managers and anchors of the news channel BFMTV.
Over bite-sized appetizers and sparkling water in a bright, glass meeting room overlooking a terrace, he told them he decided in July to cash in on the news channel, after Altice co-founder Armando Pereira was arrested in Portugal for alleged corruption. “When you have an apartment, and you realize the bathroom is worth more than the whole apartment, what do you do?” Drahi asked. He went on say that he’s been thinking about his succession and decided to start selling chunks of his empire, including the French media business, because his four kids told him they want to invest in other areas, according to people who were present but didn’t want to be identified describing a private event.

more @
https://www.bloomberg.com/news/articles/2024-04-10/altice-billionaire-drahi-seems-to-be-burning-bridges-with-creditors

2024/5/4 up-date:

Smart Money’s Appetite for Art-Backed Debt Investing: Sotheby’s Announces $700M Art Loan Securitization to High Demand
As alternative investments gain popularity among private clients, fine art is quietly emerging as a favorite asset class.
By Rebecca Fine

These days, it seems like every asset manager is offering advice to their private clients about how to build a portfolio of alternatives. J.P. Morgan says the typical range among their private bank clients is 15 percent to 30 percent of their overall portfolio. “That said, some clients with significant resources and an inclination to plan multi-generationally do allocate 50 percent or more to alternatives; much like some large endowments.” Blackrock advises incorporating private credit, and Goldman Sachs Asset Management says the conversation has shifted from the “case for investing in alternatives” to “how to invest in alternatives.”

Art investment is a favorite of the ultra-high-net-worth and their banks

As alternative investments gain popularity among private clients, one asset class is quietly emerging as a favorite: fine art. Increasingly, ultra-high-net-worth (UHNW) individuals are leveraging their art collections to access liquidity and diversify their portfolios. For an asset class that has not been traditionally viewed as a staple of an overall portfolio, this may come as a surprise. According to Deloitte, 84 percent of UHNW and high-net-worth (HNW) clients have a significant portion of their overall wealth invested in art.  Sixty-three percent of wealth managers (in private banks and family offices) have integrated art into their wealth management offerings, according to a Deloitte survey in 2023.
Their private banks have a history of investing in art that dates back to the Renaissance, when Italian bank Monte dei Paschi di Siena began building its corporate art collection in 1472. Financial institutions like Deutsche Bank, JPMorgan Chase, Bank of America, have world-renowned art collections; UBS counts 30,000 artworks in its collection.  

Art collectors are increasingly using art financing

Collectors buy art they fall in love with, made by artists whose artworks and messages resonate with them. But because primary prices are so high, they can’t (and don’t generally) ignore the fact that it is also an investment. Traditionally, art collectors have viewed their acquisitions as long-term investments, tying up significant capital in illiquid assets. Resales are sometimes not even a real consideration. However, a growing number of financially sophisticated collectors are realizing that the equity hanging on their walls can be unlocked and redeployed—without having to sell treasured pieces. This is where art financing comes in.
 Art loans are available from several private banks, certain auction houses and specialist art lenders (including Athena Art Finance). I wrote for the 2023 Deloitte Private and ArtTactic Art & Finance Report about the myriad reasons clients take out art-secured loans, the growth and the evolution of the art lending market. Even as credit markets have tightened, art lending has proliferated. Sotheby’s Financial Service, which began lending in 1988, stated recently that its art loan portfolio grew more than 100 percent over the last two years and is at its highest-ever portfolio balance. 

Art-backed debt is an attractive portfolio diversifier and a way to earn passive income

Having bundled portfolios of art-backed loans for investors for more than five years, Yieldstreet has been waiting for the broader market to take notice. Moreover, given art’s low correlation to many important asset classes, it is an ideal choice for portfolio diversification, as long as the underlying loans are carefully underwritten and serviced by experienced art finance professionals. 
A year ago, in Reasons to Love Investing in Art-Backed Debt, I explained how portfolios of art-backed debt offer investors an uncorrelated asset class with attractive yields and solid principal protection—without the costs associated with owning physical art or concerns of whether the art will appreciate in value over time. Then, in The Holy Grail for Passive Income: Art-Debt Investing, I took a deeper dive into the fundamentals of art-debt investing, focusing on the types of questions that investors should ask as they consider these investments to earn passive income. 

Now, with Sotheby’s Financial Services’ historic $700 million securitization of its art loan portfolio, art debt has come into its own as an investable asset with a public rating. 

On April 23, Sotheby’s Financial Services launched a securitization program consisting of $700 million of asset-backed notes backed by art-secured loans. Sotheby’s securitization of its art loan book is a landmark in art’s financialization, transforming what was otherwise perceived as a less illiquid and non-income-producing asset into an institutionalized financial product. It is a powerful demonstration of the great demand for art financing and it puts to bed questions about whether art is a credible asset class. As managers for pension funds, endowments and family offices demonstrated their excitement to finally incorporate art into their investment portfolios, Sotheby’s quickly increased its offering from $500 million to $700 million to match the intense demand. 
At a high level, securitization is a financial process whereby contractual debt obligations (here, art-backed loans) are pooled together to be repackaged into interest-bearing securities and then sold to institutional investors. The techniques used to mitigate the credit risk profile of asset-backed securities (e.g., over-collateralization or structuring into tranches that reflect the credit quality of the underlying assets and the attendant risks), the many parties involved in securitization and the reasons originators seek to securitize its assets are beyond the scope of this article.

How did the credit ratings agency get comfortable with this new asset class? 

In the Sotheby’s pre-sale document from the ratings agency, Morningstar DBRS, they explained a number of key considerations (which closely track my prior article for Observer): 
 Track record of the art lender: While the ratings agency did not comment on specifics around Sotheby’s underwriting of the binary risks associated with lending against fine art (such as title, authenticity, attribution), the ratings agency explained that it got comfortable with a 10-year look back at loan performance during economic cycles, including a corporate earnings recession from 2014-15, and the financial crisis of 2007-09. “What we found is that the performance has generally been fairly consistent,” said Doo-Sik Nam, a senior vice president for U.S. asset-backed securities credit ratings at Morningstar DBRS. 
 Valuations of the art collateral: Morningstar DBRS gained comfort with 10-plus years of auction data, detailing the way that Sotheby’s Financial Services evaluates art and determines high and low estimates for individual works.
Characteristics of the portfolio and diversification as a risk mitigant:  According to Morningstar DBRS, the portfolio, valued at $1.4 billion, is comprised of 89 loans that are secured by 2,484 works of fine art and collectibles. By genre, the breakdown is as follows: 43 percent of the collateral is in Contemporary Art, 21 percent is Old Master paintings, 15.57 percent is Impressionist and Modern Art, 5.25 percent is Latin American Impressionist and 3.72 percent is Chinese works of art. According to Bloomberg, one third of the portfolio consists of artworks by the following five artists: Rembrandt, Warhol, Picasso, Basquiat and Kahlo. It has also been reported that the collateral includes “collectibles, design furniture, coins, books, jewelry, watches, wine or other spirits”.  Investors can learn more about the portfolio from the offering materials (for example, borrower concentrations, artwork concentrations, artist concentrations, etc.). 
Saleability and liquidity of the art loan collateral: It is worth noting here that, as an auction house, Sotheby’s is also the sales agent in the event of a default, which greatly facilitates liquidation. 

Sotheby’s securitization program is not the first time that investors have been able to invest in diversified portfolios of art-backed loans 

While Sotheby’s bonds are available only to institutional investors (such as pension funds and endowments), for more than five years, Yieldstreet has been offering accredited investors (individuals who meet certain wealth and income thresholds) access to diversified portfolios of the art-backed loans underwritten by Athena Art Finance, with minimums as low as $10,000. Since 2019, Yieldstreet has launched eight art debt funds, five of which have fully matured.
Yieldstreet’s art debt offerings provide an opportunity for individual investors to participate in highly diversified portfolios of art-secured loans. Yieldstreet investors receive monthly passive income through notes that synthetically link to the underlying borrowers’ payments of interest and principal. Like Sotheby’s offering, the diversified art-debt offerings consist of pools of art-backed loans, and as such, investors are not investing directly in artworks. What’s more, these investments specifically do not depend on any appreciation of the artworks’ values. 
In the coming years, as UHNW collectors increasingly use leverage to grow their collections and recapitalize their investments in art, I expect that art-debt investment offerings will proliferate in an effort to meet the insatiable demand of savvy investors seeking access to the rarified world of art finance. 
A lot of ink will be spilled about investing in art-backed debt portfolios; remember you heard it here first…

Rebecca Fine is the CEO of global art lender, Athena Art Finance, and the Managing Director of Art Investments at Yieldstreet, a private market alternative investments platform. She has over 25 years of experience in the art market and art finance.

https://observer.com/2024/05/smart-moneys-appetite-for-art-backed-debt-investing-sothebys-announces-700m-art-loan-securitization-to-high-demand/

Up-date 2024/5/23

After Kevin Ching, Amy Cappellazzo, Yuki Terase, Patti Wong, Sotheby’s looses also Brooke Lampley, who heads to Gagosian
Switching from an Auction House to a Commercial Gallery
https://art-culture.world/articles/brooke-lampley/

Up-date 2024/5/29

Sotheby’s Will Reportedly Lay Off Dozens of Employees in the UK
May 29, 2024

quotes:
The house is reportedly set to cut around 50 employees based in London, and per the Art Newspaper, similar layoffs may follow in New York and at other Sotheby’s locations in Europe.
A Sotheby’s representative did not immediately respond to request for comment on the Art Newspaper report, which stated that the auction house had entered a “consultation period” in which it would evaluate its financial future.

Last year, Sotheby’s laid off at least 10 senior employees, a cutback that also seemed to coincide with the departure of at least four people involved in NFT-related sales.
Since 2019, Sotheby’s has been held privately by Patrick Drahi. In the past few years, however, there have been rumors of possible financial changes at the auction house, including a potential plan to take Sotheby’s public once again that first made the press in 2021.
full text:
https://www.artnews.com/art-news/news/sothebys-layoffs-uk-report-1234708237