on its plans for a listing.
Melrose Industries Founders Prepare to List New Vehicle in London
The founders of Melrose Industries, a prominent investment group in Britain, are gearing up to launch a new vehicle in London next month as they seek potential takeover targets. According to sources, Simon Peckham is leading the launch of Rosebank Industries, with talks underway to raise over £40m from institutional investors. The AIM market listing and fundraising will be handled by Citi and Investec.
This timing of this launch could make Rosebank the first company to debut on the London stock market after the general election. The name of the new company pays homage to the original Melrose vehicle and has been put together by six executives who collectively have 108 years of experience at their former company.
An investor presentation obtained by sources reveals that Rosebank intends to follow the “Buy, Improve, Sell” model that proved successful for Melrose, which acquired companies such as GKN, a former FTSE-100 aerospace and automotive group. The company will focus on purchasing industrial and manufacturing companies located in the UK, Europe, or North America with an enterprise value of up to $3bn (£?bn).
One notable aspect of Rosebank’s strategy is its approach to executive remuneration, which follows the same model as Melrose. This has resulted in large windfalls for top executives over the years, including a recent £180m share-based bonanza for Melrose’s CEO Peter Dilnot.
According to the investor presentation, Rosebank plans to set its annual bonuses below the market standard and place more emphasis on a shareholder-aligned long-term incentive plan paid in shares. This plan will closely resemble the one used by Melrose, measuring value creation over three-year performance periods and offering the opportunity to share in 10% of the value creation once an annual 8% return threshold is met.
Rosebank will be incorporated in Jersey, and the initial funds raised will be used for due diligence and corporate expenses. Once an acquisition is identified and executed, the company intends to move to the main London market.
Sources say that Mr. Peckham had considered bypassing the public markets for Melrose 2.0 and had discussions with several large investment firms. In an interview earlier this year, he expressed concerns that the London stock market was becoming “ordinary.”
Melrose originally listed in London in 2003, raising more than £10bn in equity to finance its string of acquisitions. Some of the notable industrial names it acquired include Nortek, Dynacast, and Elster. The company gained widespread attention in 2018 with its £8bn takeover of GKN, which sparked a highly publicized battle for the target’s independence. Ultimately, GKN was divided into two companies, with the automotive division now listed in London under the name Dowlais and Melrose becoming a pure-play aerospace company.
A spokesperson for Rosebank declined to comment on its plans for a listing.