Is Barclay’s activist agitator is demanding too risky a U-turn | Nils Pratley | Business

Edward Bramson would do everybody a favour if he outlined what he would do if he succeeds in getting himself voted on to the board of Barclays. The activist agitator, armed with a 5% holding, has offered little except a vague grumble so far.

Maybe he will open up before the showdown in May but, in the meantime, one can only inspect the contents of leaked letters to investors in his Sherborne fund. It’s thin stuff. Bramson’s argument is that Barclays’ investment bank is a “black box with too much leverage” and capital could be redeployed more efficiently in other parts of the group.

At points in the past 25 years, Barclays investors might have agreed. The bank took a wild ride that was plainly more profitable for the over-remunerated investment bankers than the people underwriting the risks. But investors think they are wiser now. They may be wrong. But, for better or worse, shareholders have taken a collective gulp and seem to support chief executive Jes Staley’s promise that he can deliver an investment bank that covers its cost of capital in most years.

Staley is not there yet and the share price is still miserable, but it is hard to detect real appetite for a strategic U-turn, which is what Bramson is demanding in effect. Barclays’ board should be able to turn this confrontation into a “back us or sack us” moment and expect to win. Incoming chairman, ex-Rothschild veteran Nigel Higgins, can paint himself as a man with an alternative pair of fresh eyes.

The sub-plot may be the most interesting part. How will Sherborne’s financial backers – led by Invesco, Columbia Theadneedle, Aviva, Fidelity and Janus Henderson – behave? They are old-school investment houses and most will also hold stakes in Barclays. Will they really support their man, Bramson, in his assault on a highly regulated bank? If they do, an entertaining City scrap is in prospect. Sadly, it seems more likely that Bramson has over-reached himself.

Ocado took its time, but it got there in the end

That’ll teach Tim Steiner not to put jokes in his results statement. An overnight fire broke out at Ocado’s warehouse in Hampshire just before the chief executive trotted out his gag about the online grocer being “an 18-year overnight success”.

The cost of the damage will be picked up by the insurers, one assumes, leaving satisfied shareholders to reflect that Steiner is right – Ocado got there in the end. After a fourfold improvement in the share price in the past two years, it’s now a company worth £7bn.

About three-quarters of the value probably lies in Ocado’s deals to sell its kit and know-how to a collection of foreign supermarket chains – Groupe Casino in France, Sobeys in Canada, ICA in Sweden and Kroger in the US. Those ventures arrived in a rush and demonstrate how Amazon’s advance into food retailing has created panic in boardrooms around the world.

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One can understand why they’re all turning to Ocado, however fanciful the idea sounded a few years ago. Steiner’s latest experiment is Ocado Zoom, offering delivery within an hour and a range of 10,000 products. Zoom still has to be shown to work profitably but, in terms of ambition, it is streets ahead of Amazon’s equivalent food operation in the UK.

HVM finds joy in Sunrise

Good news. HMV – except for 27 stores, including the Oxford Street flagship – has been bought by an owner with a claim to understanding the music business. Canadian retailer Sunrise Records still faces a mighty challenge to succeed where others have failed with HMV, but let it try.

The most relieved parties will be minority shareholders in Sports Direct. In a competitive field, a takeover of HMV would have been Mike Ashley’s strangest detour yet. Perhaps he was merely making mischief, but that’s usually when his co-investors have most reason to worry.

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