Electra slams Sherborne's claims and track record

Alice Murray
22 September 2014

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Electra Private Equity has responded to activist investor Sherborneтs claim that its strategic review would create ТЃ1bn of value, saying it is unsubstantiated.

Edward Bramson's firm had written to Electra shareholders on September 17, claiming that a proposed strategic review of the company carried out by Sherborne would create £1bn in value. However, Electra's board of directors believes the claim to be unsubstantiated as there is no detail provided on how this would be achieved.

The claim is based on an analysis of a "representative" sample of the listed-private equity's portfolio, Electra said in a statement released today (22 September). Electra says this sample set actually covers less than 30% of its current holdings.

Electra has asserted its "superior and sustainable" track record, outlining its annualised return on equity of 14% over the last decade, and highlighting its consistent outperformance of the FTSE 250 Index over the last 10 years.

Electra went on to say that Sherborne's strategic review would have a "deeply destabilising effect" on the company and "risks disrupting" its continued track record as well as potentially "destroying significant shareholder value."

In a bid to dissuade Sherborne from further pushing for changes at the listed firm, Electra has pointed to Sherborne's "lack of relevant experience and track record", highlighting that the activist investor has only provided details of five UK investments over the past 10 years, which include 3i, where Sherborne did not achieve board representation.

Electra also said that while Sherborne was invested in F&C Asset Management, the company underperformed its peers during that time. The other three investments were, according to Electra, companies that required a turnaround.

Electra chairman Roger Yates said that Sherborne's letter "demonstrates considerable misunderstanding" of how the firm works.

Electra's response to Sherborne's letter very clearly recommends that its shareholders vote against all general meeting resolutions.

Click here for previous coverage on the Sherborne/Electra battle, detailing the build-up of events over the summer.