Investment firm Sherborne Investors has become the fourth largest shareholder in Barclays PLC (LON:BARC) after taking a 5.16% stake in the bank.
Sherborne, which describes itself as a turnaround investment company, is led by Edward Bramson – an activist investor known for targeting UK companies.
READ: Barclays swings to 2017 loss but shares gain on plans to restore dividend
“As with all its shareholders, Barclays will continue to engage with Sherborne, and welcomes them as a shareholder,” the bank said in a statement.
Bramson mostly notably took control of Electra Private Equity, battled his way onto the board, cut costs and sold off various assets to raise £1.35bn for shareholders. He is due to step down as interim chief executive of the firm this month.
Bramson previously staged coups at F&C Asset Management, chemicals firm Elementis and telecoms business Spirent Communications.
Barclays shares respond positively
Shares in Barclays rose 3.6% to 217p in morning trading.
Russ Mould, investment director at AJ Bell, said with Bramson's previous successes it is little surprise to see shares respond enthusiastically to Sherbourne's investment.
“Sherborne has built a formidable reputation for squeezing improved financial and operational performance from the companies in which it invests and Edward Bramson clearly feels that Barclays shares are going cheap, given the prevailing discount to the book, or net asset value," said Russ Mould, investment director at AJ Bell.
"The question now is what the activist investor thinks Barclays should be doing differently and how he intends to get those views across to the bank’s boss."
Investors may feel the bank is underperforming, says analyst
Barclays last month recorded a £1.9bn loss for 2017, reflecting misconduct costs, the impact of winding down its Africa business and a one-off charge stemming from the US tax reform.
But the bank said it would restore its dividend in 2018 back to levels before it was cut two years ago.
Meanwhile, the future of Barclays chief executive Jes Staley is in doubt as he is currently under investigation by UK and US regulators for attempting to unmask a whistleblower.
The bank is also being investigated by the Serious Fraud Office into its 2008 Qatar-backed fundraising and is engaged in a legal battle with US Department of Justice over allegations of mis-selling mortgage-backed securities.
Mould said the positive share price reaction "suggests investors feel the bank is underperforming relative to its potential so it will be interesting to see how deeply Mr Bramson and his colleagues delve into the classic activist investor playbook and how Barclays responds, especially as the bank already has a lot on its plate" with its various issues.
He added it is unlikely Bramson can wield much influence over the SFO investigation and the lender's fight with the DoJ but "he may feel that there are other operational and strategic changes which could be made to the potential benefit of the bank’s financial performance and therefore ultimately its shareholders".