LONDON (Alliance News) - Activist investor Edward Bramson on Thursday tightened his grip on Electra Private Equity PLC, the London-listed investment trust, being named as unpaid interim chief executive officer and serving notice to investment manager Electra Partners LLP.
Bramson, who controls just over a quarter of London-listed Electra through investment vehicle Sherborne, won a place on the trust's board in November on his second attempt to win the backing of other shareholders.
He then became the chairman of the trust's so-called management engagement committee, which is responsible for reviewing the performance of Electra Partners. The trust subsequently kicked off a review, to be completed by the autumn, of its investment policy and structure.
Electra Private Equity said its review, which remains on track for completion in the autumn, has not reached any decisions on the "optimal" strategy and structure. But the conclusions that have been made to date prompted the trust to establish an executive function to "provide ongoing support" to the board, a step taken to "strengthen" its corporate governance structure.
The decision to name Bramson as interim CEO without pay was part of that move, with a search for a chief financial officer also under way.
"Neither appointment will cut across the delegation to the investment manager under the Management & Investment Guideline Agreement," Electra Private Equity said. "The board continues to explore a range of options including retaining the services of Electra Partners as investment manager under a mutually acceptable agreement."
Serving notice to Electra Partners was designed to provide the trust with the "flexibility" to put in place any potential changes to be made under the review. The MIG provides for a notice period of 12 months. Electra Partners will continue to provide the same administrative and investment management services during the notice period, although there "may be" some constraints on the rate of new investments.
Alex Fortescue, managing partner of Electra Partners, said the termination of the contract was a "surprise and a disappointment". The investment manager said its investment performance has led to "excellent returns" ahead of private equity and other indices.
"We are proud of our exceptional performance record. The termination of the contract is a surprise and a disappointment. However, we expect Electra Partners to continue to thrive with access to significant capital resources," Fortescue said in a statement.
Neil Johnson, who replaced the ousted Roger Yates as chairman of the trust in April, said: "The changes announced today are designed to strengthen the corporate governance of the company and provide the board with the necessary support to undertake its detailed review of strategy and structure. The board continues to examine its options to maximise shareholder value and will report its findings in the autumn."
"The decision to serve notice to Electra Partners is a pragmatic step that will allow the board to act on any specific recommendations of the review in a more timely way," Johnson said.
The chairman also welcomed David Lis, former chief investment officer at Aviva Investors, and Paul Goodson, former chairman of Great Bear Distribution Ltd and former managing director of Barclays Private Equity Ltd, as new non-executive directors on the trust's board.
Shares in Electra Private Equity were down 4.2% at 3,790.00 pence Thursday.
By Samuel Agini; samagini@alliancenews.com; @samuelagini
Copyright 2016 Alliance News Limited. All Rights Reserved.
