Raiders make millions on Melrose Mark II float: Rosebank shares soar on debut

Six former Melrose executives are back in the money after shares in their private equity firm soared in their London stock market debut.

In a major boost for the City after a shortage of shares in circulation, Rosebank Industries listed on AIM yesterday at 250p a share, giving it a value of £50m.

The shares rose as high as 485p before closing at 480p, giving them a value of almost £96m.

The rise delivered instant paper profits for investors, including the six former Melrose corporate raiders behind Rosebank, who bought £5m of shares at 250p.

Those shares – 10 per cent of Rosebank – were worth £9.6m at the end of the day.

The winners include Melrose co-founders Simon Peckham and Christopher Miller, who are CEO and senior independent director of Rosebank respectively.

Outgoing Melrose President Justin Dowley is also among the six and will chair the new group.

Although his partner and Melrose co-founder David Roper has also invested, he is not part of the six-strong management team of the City’s old-school corporate raiders.

Major institutions including Blackrock, Norges, GIC, Aviva and Artemis are also believed to have backed the deal.

The initial public offering came after City regulator the Financial Conduct Authority backed the biggest shake-up of listing rules in three decades in a bid to attract more companies to London.

Dan Coatsworth, an analyst at AJ Bell, said Rosebank’s debut was “one of the strongest in recent history” and “could encourage other companies to follow suit and list in the UK”.

He added: “Investors are clearly expecting the team to repeat what it achieved with Melrose.

‘The UK has a strong track record of producing high-quality manufacturing and industrial companies.

“If Rosebank can help the sick recover, it would be good for the country and the pockets of those who fix it, but there is no guarantee that they will always recover.”

In a letter to potential investors, Peckham said Rosebank would follow the “buy, improve, sell” model used by Melrose so successfully for two decades.

This culminated in the controversial acquisition of British engineering firm GKN in 2018 for £8bn.

Peckham said Rosebank would focus on buying industrial companies and manufacturers in the UK, North America and Europe worth up to £2.3bn.

The plan is to buy underperforming companies, turn them around and sell them, thereby reaping huge rewards for themselves and their investors.

“We continue to aim to double shareholder investment within three to five years,” Peckham said.

While Rosebank is starting out on AIM, London’s junior market, executives believe it will quickly move to the main market once it starts buying companies, and then move up to the FTSE 100.

This would follow the route of Melrose, which started on AIM at a value of £13m in 2003 and is now worth £7.5bn.

“Melrose has become one of the largest publicly traded companies in the UK and has a track record of delivering great success for its investors,” Peckham said.

‘This was based on the “buy, upgrade, sell” business model adopted by Melrose and which we intend to continue at Rosebank.

We believe there are more opportunities than ever to identify and acquire industrial or manufacturing companies whose full potential can be realized.

Melrose’s takeover of GKN has met with strong opposition amid concerns that the historic company could be sold into foreign hands.

The Mail’s campaign to ‘Save GKN’ received support from defence industry experts, trade unions and politicians from all parties.

But the sale went through, giving Melrose control of GKN’s aerospace business and its automotive and powder metallurgy divisions.

Founded in 1759, GKN is one of the UK’s oldest companies, producing Spitfire aircraft during World War II and cannons that defeated Napoleon.