By Anjuli Davies and Simon Jessop
LONDON (Reuters) - Activist investor Edward Bramson has raised his stake in one of Britain's oldest private equity firms, Electra Private Equity, months after making hefty profits on the sale of a stake in peer 3i.
Famous for forcing through management shake-ups at his target companies, Bramson has yet to clarify his plans for Electra, which has been buoyed by a broad stock market rally as the outlook for growth improves and fund flows to Europe surge.
Sherborne Investors, Bramson's investment vehicle, now has a 18.39 percent stake in the company, Electra Private Equity said in a statement on Monday, the third increase announced by Sherborne since it flagged a 10.24 percent stake on February 28.
In 2011, Bramson had led a boardroom coup in 2011 at British firm F&C Asset Management, ousting the chairman and pursuing a root-and-branch shake-up of the 144-year old company after years of share price underperformance.
New Yorker Bramson raised 207 million pounds in November 2012 to buy shares in an unspecified listed company it considered undervalued.
His first target, British private equity firm 3i, netted him a 38 percent return after he sold a 5 percent stake in November 2013, in what turned out to be a passive investment that involved no form of activism.
Bramson's plans for his investment in Electra, whose private equity investment trust was listed on the London Stock Exchange in 1976, may follow a similar pattern.
"Just like they did in 3i, they're building a material stake in the company. And I expect them to hold it for a year or so, or until they've extracted the value they want to achieve," Liberum analyst Rob Jones said.
"But Electra is unlike the 3i that existed before (Chief Executive) Simon Borrows took over the helm, in that it's already a well-run company, has delivered strong returns over 3, 5 and 10 years and there are no inherent issues there, it has a clear strategy," he said.
Jones also said it was unlikely to involve an expectation of an imminent distribution to shareholders.
"I don't think Sherborne would try and push for an increased rate of distributions to shareholders as Electra's portfolio is relatively immature."
A spokesman for Electra referred back to the company's previous statement: "We aim to have a constructive dialogue with all of our shareholders and look forward to engaging with Sherborne in the same way in due course."
Sherborne could not immediately be reached for comment.
Shares in thinly traded Electra were down 0.4 percent on Monday. They had posted a record daily gain of 8.6 percent on February 28.
That still leaves Electra trading flat to its net asset value, which Jones said made it pretty fully valued compared with a sector that trades on a 10 percent discount to NAV to reflect the inherent illiquidity of the underlying investments.
Just over half of Bramson's stake in Electra, 9.9 percent, is in the company's underlying shares. The remainder is held through derivatives.
Electra has gross assets of 1.4 billion pounds ($2.33 billion) as at end-September 2013, according to its website and has sold investments with a total value of 2.5 billion pounds, including the sale last year of animal tagging firm Allflex on which it made 15 times its investment.
(Reporting by Simon Jessop and Anjuli Davies. Editing by Jane Merriman)