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UPDATE 1-Electra's shareholders vote to keep activist Bramson out
October 6, 2014 / 11:31 AM / 3 years ago

UPDATE 1-Electra's shareholders vote to keep activist Bramson out

* Electra shareholders reject Bramson’s appointment to the board

* Shareholders reject Ian Brindle’s appt to board

* Activist Bramson had promised strategic review (Updates with vote result, detail)

By Freya Berry

LONDON, Oct 6 (Reuters) - Shareholders in UK private equity fund Electra have voted to reject Edward Bramson’s request to join the board, ending a standoff between the New York-based activist investor and one of the City of London’s oldest investment funds.

Ahead of Monday’s general meeting forced by Bramson, shareholders had been deciding whether to accept a management shake-up that would see the New York-based investor elected to the board. Shareholders also rejected the proposed appointment of former Sherborne chairman Ian Brindle to the board, and the removal of non-executive director Geoffrey Cullinan.

Electra’s shares fell 2.3 percent after the announcement.

Bramson’s Sherborne Investors is Electra’s largest stakeholder with a 20 percent holding. Bramson had pledged a shake-up of the fund, promising to more than double the company’s market value.

Electra, which can trace its roots back to 1935, had rejected Bramson’s advances, while shareholders had said they had not seen specific details on how the value creation will be achieved.

“He had no insights, no thoughts, no opinions, no plans - nothing whatsoever,” said a representative of Investec Asset Management of Bramson’s visit to the stakeholder after the floor was opened to questions.

The saga began in February, when Sherborne first revealed its stake in the private equity fund. In July Electra rejected a request by Bramson to join the board and lead a strategic review.

The suggestion that Electra required a revamp surprised some analysts - the fund delivered an annualised return on equity of 14 percent over the 10 years to the end of March 2014, hitting its target of between 10 and 15 percent.

Not to be deterred, Bramson submitted a September letter to Electra shareholders, saying that a reorganisation of the company could create more than 1 billion pounds ($1.6 billion) of shareholder value and take the share price to around 6,000 pence each - more than double its current levels.

Electra, whose holdings range from holiday parks operator Park Resorts to retailer Hotter Shoes, promised a “forceful response”. Its board presented a united front a few days later, recommending that shareholders vote against the resolutions.

Bramson’s letter said the six-strong board of non-executive directors - which includes an ex-member of the Bank of England’s Monetary Policy Committee and a former head of private equity for Switzerland’s UBS - was short on “commercial experience”, a charge that Electra Chairman Roger Yates subsequently told Reuters he took as “a bit of an insult”.

Two leading investor advisory groups, ISS and PIRC, also recommended that shareholders vote against Sherborne’s proposals, with PIRC saying that it had no significant concerns over the board’s composition.

Both Electra and Sherborne had been wooing shareholders in recent weeks. Electra investors have told Reuters that Bramson had so far not revealed specifics of the plan, even in private meetings. Bramson has repeatedly declined to comment to Reuters.

The case bears strong similarities to Bramson’s tilt at F&C Asset Management, another old British fund. Bramson seized control of the firm in a bitter 2011 boardroom coup, with similarly vague promises to turn the company around.

F&C shares surged by almost 120 percent from August 2010, when Bramson’s stake building began, to when he stepped down as chairman in August 2013, compared with a 50 percent rise in the FTSE Mid cap index over the same period.

Electra’s shares have risen almost 4 percent since Bramson revealed his stake on Feb. 28 this year. (Editing by Michael Urquhart and Louise Heavensz)

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