Activist Investor Takes Major Stake in Barclays

By Margot Patrick 

Barclays PLC is under additional pressure to boost investor returns after activist shareholder Sherborne Investors reported a 5.16% stake in the British lender Monday.

Sherborne, founded by turnaround investor Edward Bramson, has previously pushed for changes and taken board seats at U.K. investment companies F&C Asset Management PLC and Electra Private Equity PLC. On Monday, it said it's looking for a return on Barclays stock "in line with Sherborne Investors' customary return objectives" -- typically around double its investment.

The entry of the activist comes at a sticky time for Barclays, more than two years into a restructuring that has yet to pay off. Barclays was one of the worst-performing European bank stocks last year, and some shareholders have questioned whether Chief Executive Jes Staley has hit on the right strategy. In February, Mr. Staley said his turnaround plan is about to pay off and that the return of volatility to markets was helping boost trading revenue at Barclays's investment bank.

Mr. Staley also pledged to double the bank's dividend, helping lift the stock 4.5% between the Feb. 21 announcement and Friday. The shares rose another 4% Monday on news of the Sherborne stake.

Barclays said it will "continue to engage with Sherborne" but didn't give any details. Barclays and Sherborne officials met after the bank's February full-year results, people familiar with the matter said, but there hasn't been any contact yet with Barclays board. The people said Sherborne hasn't indicated any specific changes it might be seeking.

Over its three-year investment in F&C, Sherborne pressured the company to reduce its debt and refocus its strategy. When the company resisted, it rallied other shareholders and installed Mr. Bramson as chairman. Sherborne had doubled its money by the time it cashed out in 2013.

Sherborne hasn't always forced changes on targets, though. In 2013 it invested in private equity firm 3i Group PLC, then cashed out later that year at a double-digit profit saying it saw better opportunities elsewhere.

In Barclays, Sherborne made around one-third of the GBP1.8 billion stock-and-derivative investment ($2.53 billion) through a company it listed in Guernsey in July. The Guernsey company's stated aim was to find a single corporate target to invest in and make "a significant capital return."

It started building the Barclays stake last year, the people familiar with the matter said. At the February meeting, Barclays met Sherborne as one of its top-five shareholders. At the time, it was just below the 5% stake that triggered the disclosure Monday under U.K. listing rules.

Write to Margot Patrick at [e-mail]

(END) Dow Jones Newswires

March 19, 2018 09:25 ET (13:25 GMT)

Copyright (c) 2018 Dow Jones & Company, Inc.