Electra Private Equity severs Electra Partners ties and moves to a corporate structure

Electra Private Equity (Electra), the listed investment trust, has announced its intention to internalise all management functions and permanently break its agreement with its hitherto exclusive manager Electra Partners.

All executive and investment functions will be returned to Electra’s board from June 2017. The company also aims to migrate from a listed investment trust structure to a “corporate” structure. 

Electra’s board “concluded that significant value can potentially be captured for shareholders” through these moves, stating that savings could be in excess of £25m (€27m) per year.

“I believe that by returning control of all functions to the board we will put in place a more effective, transparent corporate governance structure,” Electra’s chairman Neil Johnson said in a statement. “A much lower-cost executive team, fully accountable to the board and shareholders, will then pursue a strategy of portfolio company improvement and value enhancement.”

The company revealed that it paid carried interest of £80m to Electra Partners in the last 12 months, a cost which will be “eliminated” on investments from June 2017.

Electra will also return £200m to shareholders in Q4 by way of a tender offer, subject to shareholder approval, in the first step to “improving the company’s capital allocation policy”.

Shares in Electra jumped by more than two per cent in morning trading to £43.16.

Electra Private Equity terminated its partnership with Electra Partners in May this year, with termination becoming effective at the end of May 2017. 

It was the result of a review of Electra initiated by activist shareholder Edward Bramson, who grabbed seats on the board in November last year.

The Electra Partners team has yet to outline its future plans, but raising an LP fund is believed to be one possibility

Since September last year the manager has secured the exits of Daler-Rowney, Elian, Kalle, MIMS and Zensar Technologies, the partial realisations of Allflex, Hollywood Bowl and Premier Asset Management, and the proceeds from the refinancing of the Park Resorts Group at the time of its merger with Parkdean Holidays.