Editor’s note: This article was updated on Dec. 15 to correct Ken Griffin’s role with Citadel Securities.
Buckle up, investors. Renowned auction house Sotheby’s may be going public once again after sources stated that billionaire Patrick Drahi is considering an initial public offering (IPO). Drahi purchased, and subsequently took private, Sotheby’s in 2019 at an enterprise valuation of $3.7 billion. Drahi has reportedly held preliminary discussions with IPO advisors that could see Sotheby’s become a public entity as soon as next year. However, these talks are still at an early stage, and details could change. A potential valuation figure was not disclosed.
The stars seem aligned for Sotheby’s to make its second public debut. This year, Sotheby’s sold an all-time high
of $7.3 billion worth of art. The record-breaking sales are the highest for Sotheby’s since it started business in 1744. Even with 20 auctions remaining this year, Sotheby’s has already exceeded its 2020 sales number by 71%. However, it’s worth noting that 2020 auction sales were considerably lower due to the suspension of live events as a result of the coronavirus pandemic.
When asked about the potential IPO, a Sotheby’s spokesperson said that the company is “focused on running our business as we wrap up a historic year.” They offered no further comments on “rumors or speculation.”
With rumors afloat, investors are anxious to know more about the potential Sotheby’s IPO. Let’s dive right in.
6 Things to Know About a Possible Sotheby’s IPO
- Sotheby’s focuses on auctioning art, real estate and collectibles. The auction house also added non-fungible tokens (NFT) to its eligible auction items this year, capitalizing on a large wave of momentum in the crypto world.
- Earlier this year, Sotheby’s made headlines when it sold a first-edition copy of the Constitution for $43.2 million to Ken Griffin, founder of Citadel Securities. The sale surpassed previous records for the sale of a book, manuscript or printed text. Griffin’s winning bid came over a group called the Constitution DAO (decentralized autonomous organization). The DAO raised over $40 million in an effort to purchase the historic document.
- Furthermore, Sotheby’s launched its “Metaverse” this year, which is a Web 3.0 NFT marketplace. NFTs accounted for almost $100 million in sales.
- The auction house makes money by taking a variable percentage of each item sold based on location and item type. For example, items auctioned by Sotheby’s in New York for less than $400,000 will incur a 25% charge to be paid by the payer. The buyer must also pay an 1% overhead premium, which is required for all sales.
- Additionally, Sotheby’s sold 158 items in the $5 million to $50 million price range this year, up 66% from 2020.
- Sotheby’s attracted many new customers during 2021; 44% of bidders this year made their first bid with the auction house.
- Finally, Sotheby’s main competitor in the auction world is Christie’s. Christie’s reported sales of $4.4 billion during 2020.
On the date of publication, Eddie Pan did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
