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Mercury Group will acquire control of the company, which also conducts private sales, selling exhibitions and advises on building collections, but auctioneer Simon de Pury will remain chairman and an ‘important shareholder’.

Despite speculation that the auction house had been struggling financially, a spokesman insisted that Phillips de Pury “did not go out seeking capital”, but said that the deal “represents a substantially expanded capital base. It means we can grow.” Details of the agreement were not disclosed, but it is thought to include the auction house’s debts.

Mr de Pury said: “We have seen tremendous growth in the company over the last four years... This partnership with a major player in the luxury sector will allow us to provide a unique platform to new and fast-growing markets. Russia has clearly emerged as an important art market.”

It’s business as usual for the moment, say the firm, and there are no plans to change the management, with Brook Hazleton continuing as managing director.

Phillips de Pury report total auction sales rising from $95m four years ago to $308m last year, with volumes increasing by 80 per cent in the half year 2007/2008. But profits are a different story – their 2007 net income is estimated at just $2.8m by Wall Street analysts.

The company have confined their business determinedly to contemporary art, jewellery, design and photography, specialising in new artists from the lucrative markets of Russia and China; there are fears that this typically speculative and investor-led market could soon be hit by the gloomy economic climate after years of bloated growth.

Phillips de Pury’s July London sale of contemporary art realised $48.6m – short of the $57.8m low estimate – with a third of the lots unsold. They have also postponed their much-publicised New York sale of hip-hop jewellery, although they say this is because unexpectedly high demand means that they need more time to accept consignments.

Mercury’s capital injection should help Phillips better keep pace with Christie’s, Sotheby’s and Bonhams. Last month, Phillips appointed Sheika Lulu M Al-Sabah as their new Middle-East director, based in Kuwait and Dubai, with plans to open an office there shortly. And Phillips de Pury’s Ariel Childs added: “I would expect that we will be capitalising on our new relations in Russia by opening a saleroom there.”

His new interest will provide Mercury chief executive Leonid Friedland with an entry into the contemporary art world. It is thought there is considerable crossover between the two firms’ clients.

By Anna Brady