Anthony Hilton: Edward Bramson's backers should be ashamed of Electra bid

Brewing giant SABMiller is not the only company with a first-class record that nevertheless finds itself under attack this week.

Electra, a long-established investment trust that has shown notable success in running private-equity-style investments, is under siege from Edward Bramson, an activist investor with a 29.9% stake in the company.

He wants two seats on the board. Electra chairman Roger Yates has just called a meeting for November 5 to vote on whether Bramson and his allies should get what they want.

We have been here before. Bramson forced a similar meeting a year ago when his stake was only 20%.

To his evident surprise, Electra’s small shareholders voted against him in large numbers. Irritated at this rare rebuff, he has raised his investment and, taking a leaf from the politician’s book of referendums, is demanding they vote again until they come up with the right result.

Yates, who knows the ways of the City from his many years in charge of Henderson, the large fund management group — remains adamant that Bramson should not come on board.

He may have something to offer but that cannot be assumed because he consistently refuses to say what his plans are or what he thinks Electra should do that it is not currently doing.

It is not the case that “Mourning Becomes Electra” — there is nothing in its recent history to give cause for regret. This gives substance to their fear that this battle is really about Bramson seeking to get control of Electra without having to go to the expense of making a full bid.

He has form in this regard. In his last major outing at fund manager F&C, he used a minority position first to get on the board, then to secure the chairmanship for himself and then to bring in other supportive directors.

This gave him effective control of the company without having to bid for it. So they have good reason to assume, in the absence of any assurance from him to the contrary, that he might try something similar at Electra to the detriment of independent shareholders.

Bramson works through a company called Sherborne Investors, which is backed among others by rival fund managers Aviva, Fidelity and Insight.

They in turn speak for about 10% of Electra and are presumably on his side, albeit not acting in concert.

All the more strange therefore that, if Bramson believes there is so much value waiting to be unlocked at Electra, he does not ask for their support in mounting a full, transparent and open bid at a suitable premium to asset value. As big investors, these institutions have a clear interest in supporting open and transparent market transactions.

Their implicit support for anything less than this does not enhance their reputations.

But a full bid is something they seem hugely reluctant to do. Instead, millions of pounds will again be spent on organising the shareholder vote. Again, the verdict should be clearly against him because Bramson’s record is decidedly mixed.

At F&C, for example, he swung the cost-cutting axe with vigour but the share-price performance on his watch was not materially better than that of Henderson, Jupiter or Schroders. They all looked quite good as they rode a rising market.

Some years ago, this column coined the phrase “drive-by activist” to characterise the breed of aggressive raider who seemed to care not about the long-term fate of the target company but only about the value they could grab in the short term.