Activist investor Edward Bramson made a shock move on Barclays on Monday as he snapped up more than 5% of the bank’s shares.
The intervention sets the scene for a dust-up between one of the UK’s most infamous corporate raiders and one of its most important City institutions.
While the secretive Bramson is unlikely to make public his intentions, the City saw the move as a statement of confidence in the present management, led by chief executive Jes Staley, but warned he could have to take the axe to costs. Shares rose 3.8% to 217p.
Bramson raised £700 million in summer for his latest fund Sherborne, after previously taking stakes in Electra Private Equity and F&C Asset Management. He has invested almost all of that in Barclays and borrowed on top of that to get a 5.16% stake valued at £1.9 billion.
Bramson is already in the money given a likely buy-in price of 180p to 190p.
According to its prospectus, Sherborne planned to invest in a “company which it considers to be undervalued as a result of operational deficiencies and which it believes can be rectified by the Investment Manager’s active involvement”.
That indicates Bramson does not intend to be passive, but it is far from clear what he will demand. Barclays has indicated it intends to ramp up the dividend next year, but may have to accelerate its move.
Sherborne becomes the fourth-biggest investor in Barclays after Capital Group, Blackrock and the Qatar Investment Authority.
Bramson has already met top Barclays executives to discuss recent results.
Miton fund manager Andy Jackson said: “It wasn’t top of my short list but I’m not 100% surprised. It fits the prototype Bramson target.
“I’m not unhappy about it. It’s undervalued and there is potential for streamlining.” Miton backed Sherborne with £4 million and also holds shares in Barclays.
Staley has moved to simplify Barclays, which has underperformed rivals for years. He sold the African arm and wants Barclays to focus on being a player on Wall Street, in the City and on the UK high street.
Bramson is not the first big investor to take an interest. In the summer US hedge fund Tiger Global invested $1 billion in Barclays shares.
Bramson is sometimes dubbed a “corporate raider” given his appetite for boardroom battles.