LONDON (Alliance News) - FTSE 250-listed private equity investor Electra Private Equity PLC on Monday said its net asset value per share produced a 25% total return for its investors in the year to the end of September, as its battle with activist investor Edward Bramson ramped up ahead of the meeting scheduled for next week.
Electra is currently involved in a battle with Bramson, the head of Sherborne Investors, who is calling for changes at the company which he claims will improve returns for shareholders. Electra on Monday reiterated its opposition to the Sherborne propositions, which will be the subject of a general meeting of the company on November 5.
Later on Monday morning, Sherborne, which runs the London-listed Sherborne Investors (Guernsey) B Ltd, responded to the letter Electra published last week in which it hit back at the claims made by Sherborne and urged its shareholders to vote against the resolutions at the upcoming meeting.
Last Wednesday, Electra said that it promotes 'reasonable questioning' of its portfolio performance. However, it said that in the opinion of its board, Sherborne Investors is "an activist investor seeking control by the backdoor". Electra also said Bramson had made a series of "ill-judged, ill-informed and ill-founded claims about the company and its board" that it cannot "let stand".
Sherborne's has proposed the appointment of Bramson and his long-time associate Ian Brindle to Electra Private Equity's board.
Sherborne said on Monday it had requested a meeting with Electra's chairman and senior independent director to discuss the company's concerns prior to the letter being published, which was refused.
Sherborne outlined its concerns again, saying the board of Electra Private Equity is not independent from its investment manager, Electra Partners. It also said Electra's net asset value underperformed in the seven years prior to Sherborne buying shares in the business in February 2014 and has only outperformed since that time.
"The unkind characterisations in the board's letter do not change the fact that Electra would benefit from more openness to new ways of increasing shareholder value, to improving oversight and governance, and to a more transparent approach to disclosure," said Bramson.
"The hostile reactions of the investment manager and the board continue to seem disproportionate to a proposal by a long-term shareholder to nominate a minority of qualified directors to Electra's board who would work collaboratively and constructively with the board and with Electra Partners," he added.
Late on Monday, Electra responded to the letter Sherborne published earlier in the day, saying it believes Sherborne had made a "misjudged attempt" to distract attention away from Electra's annual results.
"The board also notes the highly unusual step of releasing Sherborne's version of private meetings which took place between the two sides," Electra said.
"The board believes the substance of the argument remains unchanged: that Electra's performance is excellent, that no credible alternative case has been put, and that there is a risk of significant value destruction in Sherborne obtaining board representation," the company added.
In a separate statement released late Monday, Electra said independent advisory firms Institutional Shareholder Services Inc, Glass, Lewis & Co LLC and Pensions & Investment Research Consultants Ltd have recommended that Electra shareholders vote against Sherborne's resolutions.
The escalation of the battle with Bramson came as Electra said its net asset value per share rose to 3,914.0 pence per share in the recent financial year, equating to a total return for its shareholders of 25%. The company invested GBP188.0 million and realised GBP259.0 million over the course of the year and made a 34% gain on its existing portfolio.
The star performer in the portfolio was AXIO Data Group, the data management company, which delivered a GBP112.0 million uptick in value. In addition, post the year-end, AXIO sold its Asian healthcare information arm, MIMS, to Asia-Pacific-based information provider SMS and Japanese bank Mitsui for USD250.0 million, with GBP95.0 million going to Electra.
Electra said it will pay a final dividend of 78.0p per share, taking its total dividend for the year to 116.0p.
"Electra's performance continues to be extremely strong, with net asset value increasing by over GBP470 million in the two years to September 30, 2015, driven by excellent performance in the investment portfolio and impressive uplifts from realisations," said Roger Yates, Electra's chairman.
"The board believes that Electra's investment approach has served shareholders extremely well over the years, producing consistent returns in the targeted range of 10% to 15%. The current portfolio is already delivering further strong growth, driven by our unique model, and we are very excited by the opportunities that lie ahead," Yates added.
Electra shares were up 1.7% to 3,696.00 pence on Monday, while Sherborne shares were untraded, having last traded at 100.00p.
By Sam Unsted; samunsted@alliancenews.com; @SamUAtAlliance
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