Why is an activist investor targeting the top performing Electra Private Equity?


#1

Originally published at: http://whichinvestmenttrust.com/why-is-an-activist-investor-targeting-the-top-performing-electra-private-equity/
Having failed in its first attempt to parachute in new Board members at Electra Private Equity, Edward Bransom’s Sherborne Investors is having another go, but why is a turnaround specialist targeting one of the best performing private equity investment trusts and what are they hoping to achieve? Sherborne has requested an EGM (emergency general meeting)…


#2

I bought this last week, despite having reservations because of the Sherborne situation. Unless they fee up about what their plans are how the heck could I ever think of supporting them.

As it is I’ve voting with the Board and I will vote, I can see how important it is.

I’m wondering if Sherborne want to shut the thing down, sack the Electra Partners management and put it in to run off. If they do, I didn’t invest in this just to see it closed down, this is for my retirement in a few decades time (unless it makes me mega rich in which case I’d retire tomorrow). :smile:


#3

I think Electra looks like a bloody good investment @jonno and although the Sherborne thing is unsettling I can’t see how you will lose out. Even if they get their way and sack the management and start selling the assets the discount would then narrow and you’d be in the money.

This is how I’ve been thinking about it anyway. I am yet to invest anything in PE but I’m mulling the risk of investing in Electra too. As it is though I think I’d be voting against the Sherborne road show too.


#4

It’s a strange scenario where an activist investor is targeting a good performing trust, spent £300m+ on building a stake so that he’s got control almost by shareholder lethargy (on the part of those who don’t vote).

It’s is good for shareholders that he’s reduced fees and put management under a bit of pressure but it can’t be in the interest of all shareholders that these guys get seats on the board to augment changes they won’t discuss and that may only benefit their short term aims.

Something smells not quite right about this me thinks. :confounded:


#5

From a shareholder view I don’t think there is much to worry about here. Maybe Sherborne’s campaign will result in lower fees, who would object to that.

Electra’s performance has been surprisingly good though. I’d recommend anyone looking at this article looks at the analysis article too.

I wonder if shareholders qualify for discounts at TFI Frdays because I spend too much time and too much money downing cocktails there and impressing pretty ladies!


#6

@andre There is terrific performance exhibited across several listed private equity vehicles. You should have a look at HarbourVest, PIP, Graphite - all great long term performers.


#7

I wonder whether there are certain assets in the underlying portfolio that they’ve got their particular eye on. Attractive for some reason to Sherborne but not necessarily apparent to everyone else. All speculation of course.

But if they aren’t spelling out their reasons, as @citygirl says: Something smells not quite right about it all.