Electra launches investment strategy review

Following the appointment of Sherborne Investors’ representatives Edward Bramson and Ian Brindle to the board in November, the London-listed investment trust announced it will “look at all options for maximising long-term shareholder value”.

Electra Private Equity has launched a review of its investment strategy, policy and structure, it said in a statement.

The London-listed investment trust “will look at all options for maximising long-term shareholder value”, it said. The review is due to be completed during the autumn.

“Electra’s strategy and investment policy has remained substantially unchanged for almost 10 years. Together with the outcome of the general meeting on 5 November 2015, which indicated that a significant proportion of shareholders wish a review to take place, this has led the board to conclude now is the right time to undertake one,” Electra interim chairperson Kate Barker said in a statement.

Barker was appointed after the resignation of Roger Yates in early November, which came in the wake of a shareholder vote that approved the appointment of Sherborne Investors’ representatives Edward Bramson and Ian Brindle to the board. Yates had resisted the request for board seats from Sherborne, the trust’s largest shareholder with almost 30 percent of shares.

In a hostile exchange prior to the vote, among its complaints Sherborne criticised the board for its relationship with its investment manager, Electra Partners, the underlying portfolio performance, and manager fees. It indicated in a November statement that it would pursue its demand for a strategic review, as reported by Private Equity International.

Bramson was appointed at the end of November as head of Electra’s management engagement committee, which oversees its relationship with Electra Partners.

“We will look at whether the current strategy remains the best suited to maximise shareholder value in the future. We remain open to further discussions with all shareholders,” Barker said in the statement.

The newly appointed managing partner of Electra Partners, Alex Fortescue – who succeeded Hugh Mumford as he retired earlier this month after 34 years at the firm – noted in a statement that the manager had invested £1.2 billion ($1.7 billion; €1.6 billion) over the last five years and realised more than £1.5 billion, generating portfolio returns of 23 percent a year.

“These excellent returns have been generated by pursuing Electra’s strategy of investing across the private equity capital structure and focusing on substantial operational improvement and transformation in its portfolio companies,” Fortescue said, adding that Electra Partners had a strong pipeline of investments and “will continue to execute this proven strategy for all its investors over the coming months and years.”

In the ten years to September 2015, Electra's share price has increased by 210 percent compared to 72 percent for the FTSE All-Share index, it said. This is equivalent to an annual return on equity of 13 percent and within the trust’s target range of 10-15 percent.

Electra acquired two secondary fund stakes this month worth £7 million in a demonstration of its “flexible investment strategy to deploy Electra’s capital in attractive new assets,” Chris Hanna, a partner at Electra Partners, said in a statement.