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UPDATE 2-Sherborne acquires 5 pct voting rights in Barclays, sending shares up

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* Shares up more than 3 pct

* Sherborne invested 580 mln pounds

* CEO had pledged to revive investment banking franchise (Adds Sherborne statement, price)

LONDON, March 19 (Reuters) - Sherborne, led by activist investor Edward Bramson, has acquired voting rights of 5.16 percent in Barclays' issued share capital, sending the British bank's shares up more than 3 percent.

Barclays had been under pressure from investors to make the lender a profitable investment banking force - something its Chief Executive Jes Staley had promised to do when he joined in 2015.

The bank had been hit by a prolonged period of low volatility and tougher regulations on capital requirements.

Activist investors have become a growing threat for large listed firms as they often use their minority shareholdings to push through major changes in company strategy.

"As with all its shareholders, Barclays will continue to engage with Sherborne, and welcomes them as a shareholder," Barclays said in a statement after the initial disclosure of the shareholding.

By 0851 GMT, the bank's share price was up 3.6 percent at 217 pence.

Sherborne said in a statement it had invested 580 million pounds ($808 million) in the company's shares and derivatives.

Last week, shareholders told Reuters that Staley had one more year to deliver on his promise to turn its investment bank into a profit engine able to weather downturns or face demands for a review of the business.

Returns from investment banking have continued to underwhelm, despite a recent turnaround in market conditions, leading some shareholders to set Staley a deadline for an improvement.

"We understand that Barclays have had a number of meetings with Sherborne but do not know the details of their activism," a research note from KBW said.

"In our opinion, there is clearly substantial opportunity for shareholder value creation from a change in direction," it said calling Barclays the perfect activist target.

Sherborne Investors, which describes itself as a turnaround investment firm on its website, raised 700 million pounds in an initial public offering last year.

Bramson's Sherborne forced British private equity firm Electra to fire its management team. It also invested in F&C Asset Management, displacing the chief executive and overhauling the regulated financial firm's strategy in 2011.

It was founded in 1986 and is involved in both private and publicly listed investments. ($1 = 0.7179 pounds) (Additional reporting by Sinead Cruise and Helen Reid in London; editing by Louise Heavens and Jason Neely)