The private equity firm Electra is set for a public showdown with the activist investor Edward Bramson after he yesterday called for a shareholder meeting in an attempt to grab two seats on the board.
Mr Bramson’s Sherborne Investors vehicle has built a 19 per cent stake in Electra, whose portfolio of assets includes the holiday parks owner Park Resorts, builder Cala Homes and footwear brand Hotter Shoes.
But his methods have been controversial as Sherborne has previously been accused of attempting to win operational control of companies without paying a premium. A bitter campaign succeeded in 2011 when he was installed as head of F&C Asset Management, although he sold down his stake in private equity firm 3i without a fight last year. In July he demanded three seats on the Electra board and the mandate to carry out a strategic review.
Electra rejected his plans and now Mr Bramson has called an extraordinary meeting to ask shareholders to vote himself and Ian Brindle, who until last year was chairman of Sherborne, on to the board. He also wants the current board member and private equity veteran Geoffrey Cullinan voted off, in effect giving him two of seven seats, although he offered no further hint on his plans yesterday.
Electra, whose other board members include the former Bank of England rate-setter Kate Barker, insists it wants to maintain an “open dialogue” with shareholders. But it believes the presence of Mr Bramson, a major stakeholder, and Mr Brindle would jeopardise its policy of an independent non-executive board overseeing Electra’s main fund.
Conor Finn, an analyst at the broker Liberum, said: “The walls of the Electra private equity castle are strong (justifiably so in our view) and scaling the ramparts will be a significant challenge for Sherborne’s army, unless a trojan horse of opportunity can be presented.”
The company stressed Electra’s returns had been more than double the increase in the FTSE All-Share in the past 10 years. It added: “The current strategy has delivered superior long-term returns for all shareholders.”
Iain Scouller at Oriel Securities said: “Once again Mr Bramson does not say what problems he has identified at the company and what improvements he would like to make.
“Given Electra’s good long-term track record… we think that most institutional shareholders are likely to resist Sherborne’s attempts to gain board seats.”