SHARES in private equity firm 3i Group jumped three per cent yesterday after it revealed that activist investor Edward Bramson’s Sherborne Investors and its broker Jefferies has been buying up shares.
3i took the unusual step of declaring to the market that Sherborne had bought 0.7 per cent of the firm’s share capital during January, which has been sold to Jefferies, which by last week held around 1.6 per cent.
Companies are not obliged to name big investors until they pass a threshold of three per cent.
3i also drew attention to Sherborne’s stated intention to use a new £207m fund to buy a large stake in one target company.
It is thought that Sherborne has not yet been in touch with 3i to declare its intentions, and analysts pointed out that the Sherborne fund would only have enough resources to buy up nine per cent of the private equity firm’s shares.
Market-watchers also noted that 3i has been working on turning itself around since new chief executive Simon Borrows was promoted in May.
3i fended off activist hedge fund Laxey Partners shortly after Borrows took the top job, rebuffing its call to sell businesses and return cash to shareholders by setting out its own plan to cut jobs and rejig its European operations.
The firm’s shares have risen around 47 per cent since Borrows took over. Sherborne and 3i Group declined to comment yesterday.
PROFILE: EDWARD BRAMSON
EDWARD Bramson’s reputation as a fearsome activist investor is clear from 3i’s move to sound the alarm to its investors over a fleeting 0.7 per cent shareholding.
Anglo-American Bramson is best known for his boardroom coup at F&C, deposing chairman Nick MacAndrew and sparking the departure of chief executive Alain Grisay in order to overhaul the asset manager in 2011.
He put in motion plans to step back from F&C last year, as Sherborne Investors (Guernsey) B – the fund now said to have invested in 3i – was listing on the Alternative Investment Market.
He founded Sherborne Investors in 1986 as a private equity firm focused on turning around undervalued companies.
Sherborne’s website states that the firm aims to “cataly[se] prolonged period of shareholder dissatisfaction through a well researched turnaround thesis”.
Investors in the latest fund include Aviva, George Soros’s fund management firm and Jupiter.