Hedge fund manager Alexander Klabin. Photo: Sotheby’s.

Hedge Fund Manager Alexander Klabin Bets Big on Sotheby’s

US hedge fund manager Alexander Klabin has acquired a minority stake in storied auction house Sotheby’s and will serve as executive chairman of the company’s financial arm, Sotheby’s Financial Services (SFS). In his new role, the terms of which have not been disclosed, he will oversee the modernization of SFS’s underwriting services and improve its access to capital markets.

Klabin, a cofounder of the Blackstone Group–backed Senator Investment Group, was approached in 2019 by a coalition of four former Sotheby’s shareholders hoping to secure his aid in blocking a $3.7 billion buyout of the auction house by French Israeli media and telecom entrepreneur Patrick Drahi. The sale went through, and Drahi took the company private.

Since then, Klabin’s relations with Senator cofounder Douglas Silverman have reportedly soured. Klabin departed the $10 billion hedge fund earlier this year and will launch his own fund, Ancient, in 2021.

Klabin’s investment comes at a time when the art world is becoming increasingly financialized. Bloomberg reports that art-secured loans have surged 40 percent from 2016 to some $21 billion globally. Artnet News noted that prior to acquiring his stake in SFS, Klabin often served as a third-party guarantor—that is, someone who agrees to buy at auction an object for an agreed-upon price should it not sell, and to receive a portion of profits if it does sell—at New York’s largest auction houses, with one unnamed source from a competing auction house lamenting Klabin’s presumed absence in that role following his alliance with Sotheby’s.

SFS, founded some thirty years ago, claims to be the world’s only full-service art financing company. Having originated some $6 billion in art-backed loans to date, and with roughly $800 million on its books at present, it is reputed to be one of Sotheby’s most lucrative businesses.