News Column

Sherborne Investors Turns Up Heat On Electra Private Equity's Board

August 22, 2014

Samuel Agini

LONDON (Alliance News) - Electra Private Equity PLC activist shareholder Sherborne Investors has called a general meeting at which Electra shareholders will consider proposals that could result in a number of board changes, and, ultimately, a strategic review of the private equity investment trust, according to statements published by the two parties on Friday.

Sherborne, which has built up a 19% stake in Electra, wants shareholders to consider proposals that would result in the appointment to the board of Edward Bramson, a partner and the portfolio manager of Sherborne Investors Management LP. The activist is also calling for the appointment of former Sherborne Investors (Guernsey) B Ltd Non-Executive Chairman Ian Brindle. The proposals also envisage the removal of Electra board director Geoffrey Cullinan.

"Sherborne Investors has informed the board of directors of the company that, if the resolutions are passed at Electra's general meeting, it expects nominees of Sherborne Investors to lead the board in a strategic review of Electra and to present the findings to Electra's shareholders," Sherborne Investors (Guernsey) B Ltd said in a statement.

"Sherborne Investors has also informed the board of directors of the company that it intends to communicate in due course with shareholders of Electra to describe the substantial opportunities that it believes a strategic review would provide for all shareholders in Electra to increase the value of their holdings," Sherborne Investors (Guernsey) B Ltd added.

Electra said it will send a notice convening a general meeting to its shareholders in due course.

The news comes after Electra on July 29 turned down Bramson's request to be appointed to its board and to be given the mandate to lead a strategic review. The rejection followed a meeting attended by Bramson, Electra Chairman Roger Yates and Cullinan. On Friday, Electra reiterated the objections it raised last month, pointing to its policy of having independent non-executives and its track record.

"The board of Electra has a long-standing policy of being comprised wholly of independent non-executive directors. Neither Mr Bramson, representing a circa 19% shareholder in the company, nor Mr. Brindle, who has a longstanding working relationship with Mr. Bramson, would be independent. The company's superior performance over the long term provides clear evidence to support this policy of complete independence," Electra said in a statement Friday.

Electra also said that it "has always listened, and will continue to listen, to the views of shareholders consistent with enhancing long-term shareholder value."

"The board believes that maintaining an open dialogue with shareholders and a wholly independent board structure best enables the board to consider the interests of all shareholders without undue influence from any quarter," Electra said.

"The board of Electra actively keeps the company's strategy under regular review, is of the opinion that the current strategy has delivered superior long-term returns for all shareholders and sees no reason to deviate from this successful strategy," Electra added.

Over the 10 years to the end of March 2014, Electra has delivered a share price total return of 268%, more than double the total return of the FTSE All-Share (129% over the same period) and more than six times the total return for the Morningstar Private Equity Index (39% over the same period).

The company's diluted net asset value per share total return for the period is equivalent to a ten-year annualised return on equity of 14%, at the upper end of our target range of 10-15%.

According to its website, Sherborne Investors (Guernsey) B has an objective of realising capital growth from investment in a target company in which there is a "significant divergence between actual and potential operating profitability and return on capital and where the share price reflects an expectation of continuing underperformance."

The target company is identified by investment manager Sherborne Investors Management (Guernsey) LLC. The company invests in one target company at a time.

Electra Private Equity shares were Friday quoted up 0.6% at 2,685.00 pence, while Sherborne Investors (Guernsey) B shares were untraded at 99.75p.

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Source: Alliance News

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