Exposed: Barclays rebel’s $480m business disaster
Details revealed days before Bramson faces vote in board battle
DETAILS of a spectacular business failure suffered by the corporate raider targeting Barclays Bank can be revealed by The Mail on Sunday today.
Edward Bramson, the Londonborn activist investor who is trying to force his way on to the board of Barclays, has repeatedly emphasised his many successes in letters to shareholders ahead of a vote on May 2 that could give him a seat at the bank’s top table.
The multi-millionaire, who owns luxury homes in New York and Connecticut, has touted his ability to deliver ‘significant gains in operating performance and shareholder value’.
He says Barclays would thrive if it drastically scaled back its investment banking arm – something which chief executive Jes Staley has refused to permit.
But Bramson, 68, has been much less keen to talk about his 20-year stint presiding over a major business worth hundreds of millions when he joined, but which filed for bankruptcy just months after he quit. The details of his central role at Californian electronics giant Ampex, which went under in 2008, are bound to interest shareholders.
Bramson is likely to argue that he is seeking a different type of role at Barclays – which has 30,000 UK staff – than he held at Ampex. But if he wins, the information could interest regulators assessing his suitability for a directorship. Bramson, who grew up in England before moving to New York in 1975, bought Ampex in a private equity deal through his firm Sherborne & Company in 1987 for $479million, when it had revenues of $522million.
But the firm swung from a profit of $23million to an $8million loss within two years, its income had halved to $238million within five, and by 1992 its workforce had been slashed from 6,700 to 3,000.
The upheaval prompted the loss of three chief executives and 38 senior managers in four years.
Bramson took on the chief executive role in 1991 but disgruntled employees posted criticisms of his leadership online, sparking bitter court battles as Bramson sued for libel.
When Apex floated in 1992 it was valued at $102 million – a fifth of the value when Bramson’s company purchased it – and by 2007 it was worth just $7million.
Bramson stepped down as chief executive that year and the company buckled in early 2008 when it could no longer meet its pension contributions.
Paul Mumford, fund manager at Cavendish Asset Management, said: ‘Of course investors should know about this sort of thing. Everyone has their successes and failures and if you do have a failure it can be more important than some of the successes.’
Mumford also criticised the way Ampex laid off staff extremely rapidly. ‘If you cut costs and fire people left, right and centre, and create an unhappy atmosphere, then that business isn’t going to grow,’ he said. ‘If he did similar at Barclays, he’d get a lot of disruption.’
To his credit, Bramson has enjoyed numerous successes as an activist investor, turning around companies such as merchandise specialist 4imprint, chemicals firm Elementis and telecoms company Spirent Communications. He delivered share price returns to investors of 138 per cent, 144 per cent and 96 per cent respectively.
In his most recent letter to Barclays’ shareholders, Bramson said: ‘Our public investment record shows that we have consistently assisted boards, that were initially reluctant, to deliver major increases in value for all of the shareholders.’
Former business associates said Bramson, who is thought to favour deep cuts at Barclays, often keeps details of his plans private.
Keith Hopkins, former chairman at Elementis, said: ‘He didn’t put forward any particular strategy. It would seem his modus operandi is just to choose companies that haven’t been performing very well, get a seat on the board and decide what to do later.’
Barclays has said Bramson has refused to set out details of his plans in meetings with the bank.
One chairman ousted by Bramson said dealing with Bramson was like ‘grappling with a sponge’. He said: ‘It’s a one-way street with him. Even when I was deposed and he took over as chairman he didn’t tell the board what he planned to do. I think he likes to promote a certain mystique.’
Bramson has a 5.51 per cent stake in Barclays, which he bought through his fund Sherborne Investors after raising about £700million from institutional investors in 2017.
When he sought funding, Bramson pointed to the healthy returns he delivered at 4imprint, Elementis, Spirent Communications and F&C Asset Management – but did not outline Ampex’s performance.
Jupiter Asset Management has backed Bramson, who is thought to have the support of about 15 per cent of Barclays shareholders. This would fall well short of the 50 per cent he needs to win a seat, but would represent a significant revolt against management.
However, shareholder advisory firms Glass Lewis and ISS have both recommended that investors vote against Bramson’s proposals. They said the share price of Barclays is down 25 per cent in the past year but Bramson has not put forward a compelling case for a seat on the board.
Mumford added: ‘I’d send him away with a flea in his ear. You don’t like pirates on board at the best of times.’
A spokesman for Bramson declined to comment.