3i Climbs as Activist Investor Bramson Starts Buying Stock

Jan. 29 (Bloomberg) -- 3i Group Plc, Britain’s oldest private-equity firm, rose to the highest in almost 18 months in London trading after saying that activist investor Edward Bramson has been buying its shares.

Bramson’s Sherborne Investors began trading 3i shares on Jan. 2, the London-based private-equity firm said in a statement today. 3i said it “believes” Sherborne has been selling the stock to Jefferies International Ltd., which owned 1.6 percent of 3i as of Jan. 22, according to the statement.

Bramson, 61, became chairman of London-based F&C Asset Management Plc in February 2011 after criticizing the company’s business strategy and ousting his predecessor. 3i replaced its chief executive officer last year and began cutting costs after shareholders urged the company to stop making deals and return money to investors. 3i may return as much as 20 percent of the proceeds from its asset sales in 2013 to shareholders, Oriel Securities Ltd. analyst Iain Scouller said.

“It’s certainly possible that Sherborne and other shareholders could argue for a higher percentage of proceeds to be returned,” Scouller, who has a sell rating on 3i, wrote in a report to clients today. “While activist investors can call for returns of capital, this is easier said than done. 3i’s portfolio primarily consists of illiquid, unquoted assets.”

3i gained 7.9 pence, or 3 percent, to 266.8 pence in London, the highest closing price since July 2011. 3i has climbed 48 percent over the past year, valuing the company at about 2.6 billion pounds ($4.1 billion).

Sherborne Fundraising

Sherborne raised 207 million pounds in a share sale last year and said it planned to “realize capital growth from investment in a target company,” according to a Nov. 15 statement. Sherborne said it would only invest in one company at a time and would focus on a publicly traded U.K. firm that “it considers to be undervalued as a result of operational deficiencies,” according to the November statement.

The investor could buy about 8 percent of 3i if it used all the money raised in the share sale to buy the private-equity firm’s stock, Scouller estimated.

3i issued today’s statement “in the interest of transparency,” spokeswoman Kathryn van der Kroft said by telephone. Billy Clegg, a spokesman for Sherborne, declined to comment on the firm’s investment in 3i.

To contact the reporter on this story: Jesse Westbrook in London at jwestbrook1@bloomberg.net

To contact the editor responsible for this story: Edward Evans at eevans3@bloomberg.net