The activist investor Edward Bramson has sold his 6% stake in Barclays, abandoning a three-year battle to overhaul the British bank.
Sherborne Investors, Bramson’s New York-based investment vehicle, said it was selling the stake to focus on a new unnamed investment target instead. The move offers some relief to Barclays after a lengthy row with the investor over the lender’s business model and its leadership.
The British-born lawyer first took a stake in Barclays in 2018, urging the lender to scale back its underperforming investment bank to focus on its more lucrative consumer operations, claiming its strategy had failed to benefit shareholders.
However, Bramson, who has been described as a corporate raider by critics and a turnaround specialist by fans, has struggled to gain traction with fellow Barclays shareholders, who balked at his efforts to push his way on to the bank’s board in 2019, when fewer than 13% of shareholders voted in favour .
He took another run at the bank’s leadership in early 2020, calling for the removal of the chief executive, Jes Staley, after it emerged that the banking boss was facing a regulatory investigation over his links to the sex offender and disgraced financier Jeffrey Epstein. However, Bramson eased up on demands for Staley’s removal last spring in light of the Covid-19 outbreak.
In a letter to investors on Friday, Sherborne said it was taking advantage of the rise in Barclays’ share price to exit its position, having seen the stock rise to more than 180p from 73p a year earlier. However, the share price is currently 15% lower than when the fund’s position became public.
Sherborne told investors it had joined the boards of five other companies since taking a stake in Barclays, and launched “successful turnarounds at all of them”. It said: “Each of these investments returned 100% or more, so it is a pity that the opportunity did not arise to join the board of Barclays to assist in a turnaround with a similar result.
“We think that the new investment will produce better returns and has a clearer prospect of our becoming engaged in an operating turnaround, which is the primary contributor to Sherborne Investors’ investment returns.”
Shares in Barclays rose 2% on Friday after Bramson’s announcement, making the bank one of the top FTSE 100 risers.
The scale of Bramson’s stake prior to the sale made him the third-largest shareholder in Barclays, after the investment fund BlackRock and Qatar’s sovereign wealth fund.
Barclays had been under pressure to bolster profits after Staley’s push into investment banking initially failed to significantly boost profits.
Barclays reported a 30% fall in pre-tax profits in 2020, from £4.4bn a year earlier, with earnings hit by a jump in bad debt provisions. However, the bank highlighted the strong performance of its investment bank, which benefited from a jump in trading because of market volatility last year, and corporate fundraising.
The division reported a 35% increase in pre-tax profits to £4bn for the whole of 2020, providing a boost to Staley’s strategy to diversify the bank’s returns.
In its letter, Sherborne offered some parting words to the bank, which it admitted employed “many good and capable people, and is still an important institution in the United Kingdom”.
It said: “Business is not a science and so people of goodwill may, therefore, sometimes differ. In that spirit, Sherborne Investors expresses its most sincere wish that things will turn out well for Barclays, its employees, and its investors.”
Barclays declined to comment.
