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The former boss of turnaround specialist Melrose Industries has vowed to retain a London listing for his new investment vehicle even as it negotiates two US acquisitions worth about $3bn.
Simon Peckham and his colleagues at Rosebank Industries are hoping to replicate their success at Melrose with the same business model of acquiring businesses and adopting a “buy, improve, sell” mantra.
“I am categorically telling you, we’re not going to do a US listing, no intention whatsoever,” Peckham told the FT.
Peckham confirmed that Aim-listed Rosebank was finalising a $3.05bn deal for two “posh nuts and bolts” manufacturers that have both been owned by US private equity firm American Securities for the past eight years.
The talks are for deals to buy CPM, a 148-year-old food equipment maker, and a smaller company, MW Components. The talks were first reported by Sky News.
Rosebank was set up in 2024 as a cash shell by Peckham and his former colleagues at Melrose, who earned a reputation in the City as old-school corporate raiders.
Peckham said he expected the two deals to add about £1.9bn in equity value to Rosebank, which he said would propel it from London’s junior Aim market to an inclusion in the FTSE 250.
He said switching to the main market listing would be an “interesting liquidity event” as Rosebank became a more “grown-up company” and would also make it easier to attract index fund investors.
In two decades of dealmaking, Melrose became known as a “wealth creation machine” thanks to the significant returns reaped by shareholders in the industrial engineering company and multimillion-pound bonuses for its bosses.
Some of the deals attracted controversy, including an acrimonious and politically charged £8.1bn hostile takeover of engineering group GKN in 2018.
Last May Rosebank bought 75-year-old industrial firm Electrical Components International from Cerberus Capital for less than $1.9bn, funded by debt and a capital raise.
Rosebank’s share price has since halved, valuing the business at £1.34bn. They were suspended on Monday after a stock exchange statement confirmed a potential transaction.
Rosebank’s decision to list in the UK was a boost for the City, which has struggled to attract listings of large companies in recent years.
Despite negativity around the City’s ability to attract and retain listings, Peckham said: “I do believe if you have a good enough idea you can go to the markets and raise capital. We have proved that to a degree with ECI and we’re pretty confident we’re going to prove it again . . . If we can do that, there’s no reason why anyone else can’t.”
Peckham said that if the two US deals went through, $2.5bn would go towards reducing the companies’ combined debt to $800mn, cutting their annual interest bill from $210mn to $50mn, freeing up more cash for investments.
“These are high-margin, high cash-generative businesses,” Peckham said as he revealed plans to restructure both companies with a view to a sale to a strategic buyer in three to five years. Rosebank aims to double shareholders’ investment in any given acquisition over a three to five-year investment horizon.
Peckham said that while Rosebank had a “bias” towards American acquisitions, London remained an attractive financial market. “We can raise money here. We are all London-based, and we are all UK taxpayers,” he said of his team. “We want to employ people in the UK, we’re not trying to do anything else. But we do want to try and make as much money for our shareholders as possible.”
Rosebank was attracted to US targets due to the scale of the market, which offered a greater array of opportunities, as well as the recent depression in values as investors worry about the impact of AI and automation.
“We are buying the dip [of the US industrial cycle],” he said, while pointing to looser labour laws in America that made restructuring easier than in Europe where worker unions have powerful rights.