Prominent activist investor Edward Bramson has become the largest shareholder in private equity firm Electra, just three months after he exited 3i.
Through his Sherborne Investors vehicle Bramson bought 10.24% of Electra, a stake worth almost £100 million.
Despite Bramson’s (pictured) reputation – he famously took control of F&C, making himself chairman – analysts said they did not expect him to demand major changes at Electra.
‘I do not believe they will be an activist investor,’ predicted Rob Jones of Liberum. ‘Electra has a supportive shareholder base, has delivered strong historical returns for investors and Sherborne now concentrates its activities on taking minority positions, rather than through majority ownership and control of the company.’
Iain Scouller, an analyst at Oriel, noted that Electra’s other shareholders were likely to be loyal to its managers after they had consistently delivered double-digit returns in recent years, profiting from selling high-profile companies like esure for three times their initial investment. ‘Any radical shake-up which Sherborne may propose is unlikely to be received well,’ Scouller warned.
Scouller observed that Electra’s cash position had recently been cut from 15% of its net asset value to 4%, following investments in Hotter Shoes and Ogier. ‘If the idea is to try to force some capital return to shareholders, we think that most investors in Electra would not be keen on seeing the balance sheet leveraged up to any great extent given the problems leverage has caused the listed private equity sector in the past,’ he concluded.
Shares in Electra surged by 10% after the disclosure of Bramson’s position on Friday. The group, which also holds Premier Asset Management and Park Resorts in its portfolio, stages its annual general meeting on Tuesday 11 March.