Activist investor Sherborne acquires 5.2 per cent voting rights in Barclays

Barclays became a potential target of activist Edward Bramson after his Sherborne Investors acquired 5.2 per cent of the voting rights in the bank.

Barclays said in a regulatory statement Monday that it welcomed the firm as a shareholder and will “continue to engage” with the investor. Sherborne, in a separate statement, said it invested £580m in shares and derivatives of Barclays and may raise or reduce its investment without further notice.

“Sherborne Investors has advised the company that its turnaround assumptions indicate a potential return on the investment in line with Sherborne Investors’ customary return objectives,” the firm said.

Barclays, led by chief executive Jes Staley, is emerging from a mixed 2017, saying last month it will return its dividend to previous levels, while considering stock buybacks for the first time in more than 20 years. While that’s provided some relief for the CEO, the investment bank, which Staley has pledged to turn around, is still the firm’s worst-performing division and has been losing market share to rivals.

Barclays rose 3.3 per cent at in London trading on Monday morning, leading European banks higher. Before today, the stock was among the worst performers over the past 12 months in the Bloomberg Europe 500 Banks and Financial Services Index.

“There is clearly substantial opportunity for shareholder value creation from a change in direction,” Keefe, Bruyette & Woods analysts Edward Firth and Richard Smith wrote in a note. Still, “Barclays’ board have proved intractable in the past.”

Mr Bramson, a publicity-shy New York activist, is known for targeting smaller British money management firms, including Electra Private Equity, one of the UK’s oldest private-equity firms. In 2010, he went after F&C Asset Management, an institution with a history that stretches back to 1868. UK newspapers refer to him as an American corporate raider and have portrayed him as “laying siege” to venerable UK firms.

In 2013, he exited his stake in 3i Group, Britain’s biggest publicly traded private-equity firm, with a return of 38 per cent.

Bloomberg