Bramson shows hand on Electra bid
The boadroom showdown at Electra Private Equity turned up a notch yesterday as activist shareholder Edward Bramson enticed shareholders by pledging to double the share price.
Bramson slammed the Electra board’s lack of commercial experience and below-par performance in a letter to shareholders and pushed for heads to roll at a 6 October shareholder’s meeting.
Bramson will spend every day before then meeting shareholders to push his case.
“Although Electra’s investment performance has been in decline for a number of years, Sherborne Investors believes that, with certain changes in approach, the aggregate value of shareholdings in Electra could be increased by more than £1bn with lower risks and less volatility than under the current strategy.
“This equates to a price per share in the region of £60,” Bramson wrote.
Through his investment vehicle Sherborne, Bramson owns around 20 per cent of Electra. Bramson wants Ian Brindle and himself elected to the board at the expense of current member Geoffrey Cullinan.
Bramson said the push to sack Cullinan from the board was not based on “personal criticism”, but rather “it would be difficult for him to be dispassionate” in the strategic review, given that he “has been deeply involved with the investment manager and the existing strategy.”
Electra’s current board has stayed quiet on the power struggle. A spokesman said they “note Sherborne’s letter [yesterday morning] and will respond in due course”.
Each side of the debate lined up analysts to reaffirm the stellar or sub-par performance of Electra.
David Benda, at Numis Securities, said Electra shareholders will be pleased Bramson has elaborated on a turnaround plan in the letter and backed some of Bramson’s concerns but an Oriel analyst still criticised the lack of details coming forward, despite the letter.
JP Morgan Cazenove’s Christopher Brown said it remained officially neutral but added that Electra had held too much cash.
PROFILE: WHO IS EDWARD BRAMSON?
Managing member at Sherborne Investors, the New York-based investment fund, Ed Bramson is an activist shareholder, economic bellwether or a thorn in the side of the boardroom, depending on whom you ask. Bramson has a knack for operational turnarounds at portfolio companies in the asset management, consumer products, financial services, and packaging industries, pioneering some buyout techniques along the way. His turnaround investment experience started in 1977, when he co-founded Hillside Capital. He began aggressively buying up private equity group 3i last year. He eventually retreated after gaining a five per cent share and banked a £50m profit via a special dividend, cementing his corporate raider reputation. His previous private buyout funds have won the backing of George Soros, Aviva and Threadneedle. His most recent example is F&C Asset Management. In 2011 he staged a boardroom coup against the chairman of F&C Asset Management and stayed on in that role until 2013. Bramson has been credited for the sharp improvement in the company’s performance, with pre-tax profits and earnings per share both surging due to Bramson’s cost-cutting drive and executive appointments, which garnered some praise from analysts. Bramson’s boardroom partner at F&C was Ian Brindle, who has been called upon again to take a seat at Electra.