Electra board shuns Sherborne demands

Electra stated that Sherborne head Edward Bramson initially requested a meeting with Electra chairman Roger Yates. At the meeting, which took place on 24 July, Bramson requested that three new directors be appointed to the board of the listed private equity firm.

Bramson had proposed to put himself forward as one of the new directors and appoint the other two. Furthermore, Bramson expressed his intention to lead a strategic review of the company following the board appointments, Electra stated.

Unsurprisingly, Electra rejected Bramson's demands, arguing that its board has always been exclusively composed of independent non-executive directors. "Bramson, representing a c19% shareholder in the company, would not be independent," Electra added in a statement released today (29 July) in which it also claims that the firm's performance vindicates this strategy.

Speculation has risen in recent months over the true intentions of Sherborne with regards to its strategy of slowly building up an Electra stake. Electra's Yates himself was quoted as saying he was not aware of Sherborne pursuing a particular agenda back in May.

This latest development will at least clear some of the uncertainty regarding Bramson's true intentions, analysts argued in the wake of Electra's announcement. JP Morgan stated it was now expecting Bramson to put the proposal to a shareholder vote, adding that a "period of distraction" for Electra's management could follow. Investment bank Liberum added that the situation could lead to a short-term hit to the firm's share price.

Build-up
Sherborne first invested in Electra in late February, buying a combination of shares and swaps, which amounted to a 10.24% stake. This initial purchase caused Electra's share price to increase by 250 pence to £27.50. Sherborne raised its interest in the company on 4 March and 6 March. As of May, Sherborne had a stake of around 19% in Electra.

Bramson's interest in the listed firm came after he realised his investment in 3i in November last year, in a move that rewarded him with a 38% return.

In 2011, Bramson led a boardroom shake-up at F&C Asset Management, which saw the firm's chairman ousted and a general overhaul of the company. However, Bramson remained a passive investor when involved with 3i.

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