3i Group Plc (III) defended its strategy for turning around the company after activist investor Edward Bramson announced he boosted his stake in Britain’s oldest private-equity firm.
3i’s efforts to reduce costs by cutting jobs and closing offices outside the U.K. has created “a compelling value proposition for shareholders,” the London-based company said in a statement today. The defense followed an earlier disclosure from Bramson’s Sherborne Investors that it now owns 4.2 percent of 3i, making it the firm’s third-biggest shareholder.
“We have wasted no time in implementing the significant organizational and cultural changes that were needed,” 3i Chief Executive Officer Simon Borrows said in the statement. “We are confident that we can drive improved performance and deliver shareholder value over the coming years.”
Bramson, 61, has been targeting 3i after orchestrating a management shake-up at London-based F&C Asset Management Plc. He became the London-based fund manager’s chairman in February 2011 after criticizing its business strategy.
3i shares fell 5.1 pence, or 1.6 percent, to 315.3 pence as of 1:49 p.m. in London, valuing the company at 3 billion pounds ($4.5 billion). The stock has surged 60 percent since Borrows announced a strategy overhaul in June. Borrows had replaced Michael Queen as CEO one-month earlier.
Billy Clegg, a spokesman for Sherborne, didn’t immediately return a phone call and e-mail seeking comment.
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.”
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