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The founders of Melrose Industries, a leading investment group in Britain, are preparing a new venture. They aim to list this new vehicle in London next month as they search for new takeover opportunities.

Sky News has learned that Simon Peckham is leading the launch of Rosebank Industries. They are currently in talks to raise more than £40 million from institutional investors. To assist with the AIM market listing and fundraising, they have appointed Citi and Investec. This timing may position Mr. Peckham’s company as the first to debut on the London stock market after the general election.

The name Rosebank, created by six executive, is an homage to the original Melrose. Together, these executives have spent a combined 108 years at Melrose. An investor presentation seen by Sky News reveals that Rosebank plans to replicate the successful ‘Buy, Improve, Sell’ strategy of Melrose. This strategy helped Melrose acquire companies like GKN, a former FTSE-100 aerospace and automotive group.

Additionally, Rosebank will target industrial and manufacturing companies in the UK, Europe, or North America, with enterprise values of up to $3 billion. The approach to executive remuneration will mirror that of Melrose, where top executives earned significant windfalls over two decades. The most recent payout confirmed a £180 million share-based reward for executives, including Melrose’s chief executive, Peter Dilnot.

Rosebank’s investor presentation indicates they will set annual bonuses below market norms. Instead, the focus will be on a shareholder-aligned long-term incentive plan, paid in shares. This plan will measure value creation over three-year periods, with the chance to share in 10% of the value created once it meets an annual 8% return threshold.

What’s more, Rosebank will be incorporated in Jersey. The initial fundraising will cover due diligence and corporate expenses. Once an acquisition is identified and completed, Rosebank plans to move to the main London market.

Moreover, Mr. Peckham had considered avoiding public markets for this new venture, dubbed Melrose 2.0. He held discussions with several large investment firms. In an interview with The Sunday Times earlier this year, he expressed concern that the London stock market was “in danger of being ordinary.”

Lastly, Melrose listed in London in 2003 and issued over £10 billion in equity to fund acquisitions. Among its acquisitions were Nortek, Dynacast, and Elster. The £8 billion takeover of GKN in 2018 brought Mr. Peckham and his team into the public eye, as GKN fought to remain independent. Eventually, GKN split into two companies. The automotive division now trades in London under the name Dowlais, and Melrose has become a pure aerospace company. On Saturday, a Rosebank spokesman declined to comment.

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