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Sotheby’s has struck a deal with US private capital firm KKR to borrow up to $100mn secured against the fees clients owe it on their auction purchases.
The transaction is set to add another layer of debt to the auction house seven years after billionaire Patrick Drahi acquired it in a leveraged buyout. Since then, Sotheby’s has racked up several years of large losses as it struggled with a heavy debt burden and a lacklustre art market.
Sotheby’s, which is best known for selling high-value art but also auctions jewellery, watches, luxury cars and other collectibles, has more than $1bn of outstanding debt across publicly traded bonds and bank facilities. It has not yet drawn down any of the KKR facility, according to documents circulated to credit investors last week.
The deal with KKR will allow Sotheby’s to access money it is owed from auction sales in New York and London straight away, by borrowing from the private capital firm and pledging the fee receivables from clients as collateral.
Sotheby’s was considering using the debt to pay sellers a proportion of their proceeds soon after a sale, said people familiar with the matter. The auction house’s standard terms are to pay sellers 45 days afterwards.
As part of the debt deal struck in February, the auction house will pay an interest rate of more than 8 per cent on money it borrows, in order to, in effect, factor receivables from artwork sales. Under the facility, which is due for repayment in 2029, it will be able to borrow a maximum $100mn, according to terms seen by the FT.
Sotheby’s made a $53mn pre-tax profit in 2025, up from a $190mn loss the year before, the FT has reported. The company’s outlook was recently upgraded by rating agency Moody’s to positive and by S&P to stable, although its junk credit ratings remained unchanged at B3 and B minus, respectively.
The auction house has also been offering sellers an interest rate of 7 per cent to delay paying out sale proceeds as part of its efforts to conserve cash.
Last week, Sotheby’s launched an $825mn bond offering. The auction house sold the debt at a yield of about 8.5 per cent — towards the higher end of initial price discussions, according to people familiar with the bond sale.
In private figures shared with credit investors, the auction house said that the money it borrowed from KKR would “be used for general corporate purposes to provide additional liquidity to enhance the issuer’s working capital as needed in our business, including to manage seasonality, and to provide general operational flexibility”.
Sotheby’s declined to provide further comment. KKR declined to comment.
Additional reporting by Alexandra Heal in London and Michelle Chan in New York
