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(Adds investor comment, further context on Sherborne fund)
By John O'Donnell, Iain Withers and Carolyn Cohn
LONDON, May 7 (Reuters) - Activist investor Edward Bramson
has sold his firm's 6% stake in Barclays, disbanding a
three-year effort to overhaul the British bank and ending a
stand-off with chief executive Jes Staley.
Bramson's fund, Sherborne Investors, had pressured Staley
since 2018 to scale back investment banking and demanded his
removal over his links to U.S. financier and registered sex
offender Jeffrey Epstein, but Bramson struggled to gain much
traction.
The value of the Sherborne vehicle dedicated to the Barclays
stake has fallen by around 150 million pounds ($209 million)
compared to the 700 million pounds it raised when it was formed
in 2017.
The fund, in which UK asset managers Aviva and Schroders
have stakes, said it had identified another company to invest in
and has begun building a position in that firm, which it did not
name.
Barclays declined to comment.
"Business is not a science and so people of goodwill may,
therefore, sometimes differ. In that spirit, Sherborne Investors
expresses its most sincere wish that things will turn out well
for Barclays, its employees, and its investors," Sherborne
Investors Management said in a statement.
One top 20 investor in Barclays, who declined to be named,
said a recent rally in Barclays' shares on investor bets of a
strong recovery from the COVID-19 pandemic had provided Bramson
with an exit route and predicted he would opt for a less complex
next target.
Barclays shares have fallen roughly 15% since Sherborne
first declared its stake in Barclays in March 2018.
The stock was up 2% on Friday.
'THE WAR IS OVER'
When Sherborne first invested, Barclays had been under
pressure to bolster profits after Staley's aggressive push in
investment banking since he joined in 2015 failed to
significantly lift returns.
Barclays was Bramson's largest target to date. He engineered
turnarounds at smaller firms including British private equity
firm Electra after forcing his way onto the board. But a bid by
Bramson for a board seat at Barclays was emphatically rejected
by shareholders in 2019.
A strong showing by the investment bank helped it weather
the COVID-19 pandemic, bolstering Staley's argument that it
needed a diversified business to cope in a recession.
"The war is over," wrote Ian Gordon, a banking analyst at
Investec.
"We sense that investor appetite for a further round of
heavy restructuring charges to execute such a repositioning of
the group was limited".
Bramson also urged Barclays' board to replace Staley after
the UK regulator said it was examining his links with Jeffrey
Epstein, but failed to win support.
Staley has said he regrets having a professional
relationship with Epstein, who killed himself while awaiting
trial on sex trafficking charges.
Sherborne initially invested 580 million pounds in Barclays'
shares and derivatives but the investment did little to lift its
fortunes.
The net asset value of the Sherborne fund is currently 79
pence per share, it said, compared to 99 pence in December 2017
before it made the Barclays investment.
($1 = 0.7183 pounds)
(Reporting By John O'Donnell in Frankfurt and Iain Withers and
Carolyn Cohn in London; editing by Rachel Armstrong and Elaine
Hardcastle)
