Activist Investor Sherborne Sells Entire Stake in Barclays

(Bloomberg) --

Edward Bramson’s Sherborne Investors Management LP has sold its entire stake in Barclays Plc, ending its more-than three year battle over Jes Staley’s strategy to bolster the lender’s investment bank.

The activist investor has divested its entire 6% holding and is building a position in an undisclosed company, Sherborne said Friday.

“Business is not a science,” the fund said in a letter to investors Friday. “We have begun building a position in a new investment”, which offers a better return to the company’s shareholders than a continuing investment in Barclays, it added without further identifying its new position.

Sherborne, which first bought a stake in the British lender in March 2018, has been a fierce critic of Chief Executive Officer Jes Staley’s strategy to boost the securities unit and urged the board to mimic cutbacks at Deutsche Bank AG to improve profitability. But its proposals gained little traction and strong recent results at the investment bank unit only strengthened Staley’s position.

Staley has been the key architect of expansion at Barclays investment bank since taking the reins in 2015 and he has grown it as a hedge during times of economic crisis. The strategy paid off amid Covid thanks to pandemic-driven volatility and a rush of companies tapping wide-open capital markets. Revenues at the securities unit increased by 22% in 2020, partially offsetting weaker results elsewhere.

Barclays shares have been among the best-performers over the past year, gaining 70%, although they are still down 18% from the time Sherborne disclosed its initial stake in March 2018. Sherborne said it sold its position at an average price of 186 pence. Barclays shares, which closed at 177 pence on Thursday, rose as much as 1.9% in Friday trading.

A representative at Barclays wasn’t immediately available to comment.

Last year, Sherborne called for Staley’s removal from the board, following the disclosure of a British regulatory probe into how the CEO characterized his relationship with deceased financier and sex offender Jeffrey Epstein. The board at Barclays has said they fully support Staley.

Sherborne, which failed in its attempt to get a board seat at Barclays, said in its investor letter that it expected its new investment, which “hasn’t yet reached the public disclosure threshold,” would afford it a better opportunity to effect change.

“It is a pity that the opportunity did not arise to join the board of Barclays to assist in a turnaround.”

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