ELTA : Sherborne discloses why it targeted Electra
Sherborne has today published a long letter that it is asking Electra to send to its shareholders that sets out its reasons for targeting Electra.
Sherborne has compared Electra’s performance to the FTSE 250 index from 2004 and, from 2009, unlisted “private equity funds of similar size” and says Electra underperformed these measures. It also says the companies that Electra invests in do not have as good a track record of improving their operating efficiency as companies that Sherborne has invested in.
Sherborne criticises Electra’s use of ZDPs and convertible finance – saying Electra borrowed the money but did not invest it. Sherborne also claims that investment expenses have absorbed 42% of Electra’s investment returns over the past five years.
Sherborne also claims that the current board does not have the expertise to assess how well the manager is doing its job.
No doubt Electra will respond to this criticism.