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Electra fends off activist Bramson's restructuring plans

Electra Private Equity investment trust rebuffs activist shareholder Edward Bramson's attempts to overhaul strategy.

Electra fends off activist Bramson's restructuring plans

Electra Private Equity (ELTA ) has rejected activist shareholder Sherborne Investors Management's requests for a change of directors and strategy at the trust.

Sherborne, led by Edward Bramson (pictured) has built up a 19% stake in the private equity-focused investment trust. Electra non-executive chairman Roger Yates said he met with Bramson last week and turned down his requests for the appointment of three new directors, one of whom would be Bramson with the other two unidentified individuals to be nominated by him. Yates said he also rejected Bramson's call for a mandate to lead a strategic review of the company.

The company said in a statement: 'The board of Electra has a long-standing policy of being comprised wholly of independent non-executive directors. Mr Bramson, representing a c.19% shareholder in the company, would not be independent. The company's consistently superior performance over the long term provides clear evidence to support this policy of complete independence.'

The board stressed the trust's long-term performance remained strong, up 268% over 10 years versus a 129% rise by the FTSE All-Share over the same period. It is currently trading on a discount of 8.7%  

Analysts Liberum said while it was positive that Bramson's intentions were now known, the ructions could result in short-term price weakness. It has a 'neutral' outlook for the trust.

'ELTA's management team is one of the most highly regarded in the sector and we would expect the majority of the existing register to be supportive of the board's stance,' it said. 'ELTA has delivered strong returns for shareholders over the long-term and it could not be argued that this is a mis-managed business.

'Sherborne focuses on investing in public companies that have underperformed due to operational issues but have the potential to increase profits substantially on the back of a turnaround strategy. ELTA does not appear to be a natural fit for this strategy.'

Max King of fund group Investec Asset Management, one of Electra's largest shareholders, said he was 'wholly supportive' of the board's decision to reject Bramson's proposals.

'The duty of directors is to each represent all shareholders. We do not believe that the directors proposed by Mr Bramson would do more than represent his own interests,' he said.

'We see no need for a “strategic review” other than the ongoing strategic review of the business which it is the duty of the board to continue at every board meeting. Mr Bramson’s request implies some unspecified change of direction, the need for which is far from apparent. Any change is more likely to be for the worse than the better, in our view.'

1 comment so far. Why not have your say?

Michael Sherratt

Aug 22, 2014 at 08:59

It would be useful to see what tactics might be used and what eventual outcome might be anticipated if Edward Bramson et al. achieved their immediate goal. What's in it for them and how much will I lose? Please speculate. I have been an investor with Electra for a long time and am happy with the Board.

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