The founders of Melrose Industries, one of Britain’s most prolific and profitable investment groups, are preparing to list a new vehicle in London next month as they look for a new wave of acquisition targets.
Sky News has learned that Simon Peckham is leading the launch of Rosebank Industries, with talks underway to raise more than £40 million from institutional investors.
Citi and Investec have been appointed to work on the AIM market listing and fundraising.
The timing of Peckham’s plans could see his new company become the first to debut on the London stock exchange after the general election.
Rosebank, named after the original Melrose vehicle, was assembled by six executives who spent 108 years at their former company.
According to an investor presentation seen by Sky News, the Rosebank team aims to recreate the ‘Buy, Improve, Sell’ model that saw Melrose acquire companies including GKN, the former FTSE-100 aerospace and automotive group.
It will seek to buy industrial and manufacturing companies based in the UK, Europe or North America with an enterprise value of up to around $3 billion (£? billion).
Notably, it will employ the same approach to executive pay as that which saw Melrose’s top team receive windfall profits worth hundreds of millions of pounds over two decades.
The latest payout, confirmed last month, crystallized a £180m share-based bonanza for executives such as Melrose chief executive Peter Dilnot.
According to the presentation to investors, Rosebank will set its annual bonuses “at a level below normal market practice, with the rewards package focusing on a long-term shareholder-aligned incentive plan, paid in shares”.
“The long-term incentive plan will be very similar to that used for Melrose, measuring value created over three-year performance periods, with the opportunity to share 10% of the value creation once the investment has reached a threshold annual return of 8%. “
Rosebank will be incorporated in Jersey, with the initial fundraising proceeds used to fund due diligence and corporate expenses.
Once an acquisition is identified and executed, Rosebank intends to move into the main London market.
Peckham was deliberating the possibility of avoiding the public markets for what was dubbed Melrose 2.0, and was said to have held discussions with several large investment firms.
In an interview with The Sunday Times earlier this year, he warned that the London stock market was “in danger of being normal”.
Melrose listed in London in 2003, issuing more than £10 billion of shares to finance its series of acquisitions.
Among the other industrial names acquired by Melrose were Nortek, Dynacast and Elster.
It was the £8 billion takeover of GKN in 2018 that thrust Peckham and his colleagues into the public spotlight, as the target fought a bitter and ultimately unsuccessful battle for its independence.
GKN was eventually split into two companies, with the automotive division now listed in London under the Dowlais name, and Melrose transformed into a pure aerospace company.
On Saturday, a Rosebank spokesperson declined to comment
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