Chinese Life Insurance Company Buying Into Sotheby's

The Wall Street Journal is reporting that a Chinese Life Insurance Comapany, run by the grandson-in-law of Mao Zedong has purchased 13.5% of Sotheby's. Taikang Life Insurance, run by Chen Dongsheng who is an art collector and who assisted in the formation of China Guardian Auctions. Reports are also stating that Taikang Life Insurance may wish to nominate members to the Sotheby's board.

The Wall Street Journal reports

A Chinese life insurance company run by the grandson-in-law of Chairman Mao Zedong has bought a 13.5% stake in Sotheby’s, citing a “positive view” of the auction house as well as potential interest in a board seat.

Taikang Life Insurance Co., one of China’s biggest insurance companies, disclosed its stake Wednesday in a filing with the Securities and Exchange Commission, a regulatory requirement for active investors who press for corporate change.

The move makes Taikang the largest shareholder of Sotheby’s, eclipsing stakes held by hedge-fund managers such as Third Point’s Dan Loeb, who owns 11.38%, and Point72 Asset Management’s Steven Cohen, who owns 5.5%.

Taikang is run by Chen Dongsheng, a businessman best known in art circles as an art collector who helped found China Guardian Auctions Co. Ltd., the country’s first government-run auction house specializing in Chinese antiques and calligraphy. Mr. Chen, who is in his late 50s, is married to Mao’s granddaughter, Kong Dongmei.

China Guardian has long ranked behind China’s top-selling auction house, Poly Guardian, but it has recently expanded internationally in an attempt to attract more global buyers.

In 2012, China Guardian held its first sale beyond mainland China with a Hong Kong auction of antique Chinese ink paintings, calligraphy and imperial-era furniture. It also opened an office in New York in 2011, and regularly conducts “Antiques Roadshow”-style events in U.S. cities in hopes of consigning overlooked Chinese antiquities coveted by Chinese buyers.

Hong Kong, where much of its consignments get offered for sale, remains a key sales hub, where it has typically competed with Sotheby’s for bidders—so Taikang’s investment could present both Sotheby’s and China Guardian with potential benefits and conflicts of interest.

Tad Smith, Sotheby’s chief executive, said in a statement that the auction house’s board had met with Taikang’s executives and “warmly welcome their support of Sotheby’s strategic initiatives.” Mr. Smith said he expects “all shareholders, clients, and staff will benefit” from the move.

Taikang expressed support in the filing for Sotheby’s “broader strategic initiatives” and said it has “provided suggestions regarding future director nominations for election” to the board, potentially including people associated with Taikang.

Three months ago, Sotheby’s also attracted attention from Singapore-based investment firm Shanda Group, which bought a 2% stake in the New York auction house in May, after receiving U.S. antitrust approval.

Last week, New York-based Sotheby’s said it auctioned $2.4 billion in art during the first half, down 25% from a year earlier. Sotheby’s sold $460 million worth of Asian art during the first half of the year.

Shares of Sotheby’s rose 1% to $31.80 in after-hours trading.

Source: The Wall Street Journal