Sherborne urges Electra shareholders to back board vote

Sherborne urges Electra shareholders to back board vote

The shareholders of Electra Private Equity have been urged by Sherborne Investors to vote in favour of all the resolutions to be tabled at a meeting on November 5.

It is a second attempt by Sherborne, which has a 30 per cent stake in Electra, to appoint Edward Bramson and Ian Brindle to the private equity group’s board.

In the letter sent out today (October 16) by Sherborne, it argued the addition of two people to the board of eight “would add skills and oversight while retaining six incumbent directors. It does not begin to approach ‘control’”.

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Electra’s board argued against the letter, suggesting Sherborne was short-termist and focused on cost-cutting.

It stated: “Electra’s corporate governance is deficient. The board has, to all intents, conceded that it is not fully independent of its investment manager, Electra Partners, which effectively controls board nominations and opposes additional board oversight.”

The letter from Sherborne also suggests Electra Private Equity had been underperforming until Sherborne Investors acquired shares.

However, Roger Yates, chairman of Electra Private Equity said claims by Mr Bramson he could add £1bn of value to the firm were unsubstantiated.

The letter said: “The board highlights Electra’s share price performance since 12 October 2006. Electra underperformed the FTSE 250 by 14 per cent from then until January 2014 when Sherborne Investors started buying its 30 per cent shareholding.”

Mr Bramson, a partner in Sherborne Investors, said: “The hostile reactions of the investment manager and the board seem disproportionate to a proposal by a long-term shareholder to nominate a small minority of qualified directors to Electra’s board.

Mr Yates added: “Sherborne has still made no case for changing Electra’s successful, proven model. [Mr Bramson] has instead chosen to make baseless criticisms about the way the company is run. Sherborne is an activist investor with a short-termist track record. Today’s letter does nothing to change that.

The letter said: “Our nominees are exclusively aligned with the interests of all shareholders and their independence from the investment manager would not affect their desire to work collaboratively and constructively with the board and with Electra Partners.”

At the meeting in November, shareholders will vote on resolutions to appoint Mr Brindle, former UK chairman of PwC, and Mr Bramson, who served as chairman at F&C Asset Management to the board.

But at a meeting in October last year, Electra shareholders rejected resolutions proposing the election of both men to the board.