Edward Bramson keeps his cards close to his chest.
Since the activist investor was appointed a non-executive director at one of the London Stock Exchange’s most successful listed private equity trusts in November 2015, Electra Private Equity has completed two strategic reviews. The first saw the company’s general partner Electra Partners – now renamed Epiris – served a 12 months’ termination notice in May 2016 to save approximately £28 million ($36 million; €32 million) in management fees each year.
The second, completed in October, saw the firm cease new investments due to current market conditions and announce its intention to remove “Private Equity” from its name. The process reflects Electra’s efforts to remove “market valuation inefficiency” by transitioning from a closed-end investment trust to a new corporate structure, its 2016 annual report noted.
One of the outcomes of Bramson’s involvement and Epiris’ departure has been a rash of exits: its direct unlisted portfolio has dropped from 25 companies in September 2015 to just five by October, including TGI Fridays, Hotter Shoes and Photobox. The firm also disposed of all funds, secondaries, debt and listed assets.
The majority of this exodus occurred while Epiris called the shots. Between September 2015 and 31 May – its last day of management – the Electra portfolio value shrunk from £1.6 billion to £416.2 million. Since Electra assumed management of its own portfolio, the value saw a further fall to £335.6 million.
Epiris declined to comment on its motivation for the sell-off, although it can be assumed that the more value an external manager can crystallise while at the helm, then the more it can claim in carried interest payments.
Perhaps more importantly in the long term: the more exits a manager has completed, the tidier its track record looks as it raises capital for its first independent fund. In May, Epiris held a first close on £500 million for a vehicle with a target size of up to £1 billion, PEI reported.
Whether or not Bramson had a sell-off in mind when he first got involved with Electra Private Equity is not clear.
“Because we never quite knew what his game plan was in the first place, it was one of those wonderful strategies whereby if you don’t tell anybody what you’re going to do, whatever you do is the game plan”
In a letter to Electra shareholders dated October 2015, Bramson said the firm “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”.
Electra’s annual report for that year said Sherborne [Bramson’s company] had “consistently refused, despite repeated requests, to explain how and why they wish to implement changes to the company’s proven model” and “on many occasions they have promised that their strategic changes will deliver £1 billion of additional value, but without providing any detail”. To Bramson’s credit, the firm has returned more than £1.9 billion to shareholders since his arrival.
“He’s kept well away from the analysts,” one listed private equity analyst who asked not to be identified told Private Equity International. True to this form, Bramson – through his PR people – declined to participate in this article.
“Because we never quite knew what his game plan was in the first place, it was one of those wonderful strategies whereby if you don’t tell anybody what you’re going to do, whatever you do is the game plan,” the listed analyst noted.