Supporting Rosebank from IPO to over £3bn raised

I'm joined today by Adam Bidwell, Equity Sales and Simon Peckham, Chief Executive at Rosebank, both of whom have been at the heart of one of the most exciting growth stories on the London Stock Exchange. They're joining me to discuss Rosebank's rapid scale since it's 2024 IPO, it's record-breaking transactions, the strength of its partnership with Investec and what this means for the wider UK investment landscape.

 
For those of you that don't know you and the Rosebank story, can you describe Rosebank and what's it's business model? 
 
Simon Peckham: Well, it’s essence actually goes back to 2003, I was one of the founders of Melrose and the business model hasn't changed that much. So we go looking for manufacturing businesses we think aren't quite performing to their potential. We buy them, we try to improve them and ultimately we will sell them in broadly a three to five year time zone, trying to double shareholders money on the way and doing lots of things to try and achieve that. So we did quite a bit of that for 20 years at Melrose and for a number of reasons Melrose became an aerospace business. So we thought actually time to move on, do it somewhere else.

 
So we set up Rosebank about two years ago, raised some money from the same shareholders, raised about £50 million to just be able to in a position to actually approach sellers and say we've got some money and we've got some support and basically have made acquisitions for ECI and now CPM and MW.

Adam Bidwell: So I and Investec first started working with Melrose in 2003 and it was a similar structure as a cash shell to give them a platform to start acquisitions. So my history or Investec's history dates back to Melrose 2003 and we followed them all the way through till into Rosebank. It's been a great journey and hopefully Rosebank is the start of a new journey.

Simon Peckham: Look, it's all about shareholders and it's about the relationship with shareholders. So we are very privileged to enjoy good relationships to go back over 20 years with a with a large number of major city institutions and actually investment solutions around the world. So it's all about that and it's about finding the right opportunity. So we work hard to do that. We only look at businesses where we think we can make a big improvement, and we managed to persuade our shareholders that they agree with that. And hopefully we raise money from the stock market and go and deploy it, which is, you know, in a way what the stock market's for, isn't it? I mean, stock market has trade shares, but also to give companies that want to grow the opportunity to raise money from their investor base and deploy it and make money for everyone.

 
Simon Peckham: Well, we've essentially bought three things. In many ways we bought three things that have very similar stories, but they're not the same business sectors. So we bought three things from private equity. We bought three assets that have been in private equity ownership for about eight years each. So quite a long term in their portfolios, we bought three assets that were very heavily leveraged. So part of the big story what we've been doing is actually reducing debt in our businesses to free up cash flow to invest in them and drive them towards their performance. So ECI, the first thing we bought, actually had seven times EBITDA debt, MW the same and actually CPM 10 times EBITDA debt. Half the price that we paid for MW and CPM was actually deleveraging the assets. So what we do is we create an environment where we can allow investments and we can allow the management teams, sometimes management team people will change, we can allow the management teams to actually invest in their businesses, drive the businesses forward and actually, you know, create more employment, hopefully, but also create better businesses in the long run and return money back to our shareholders.

Adam Bidwell: So as you say, we started working with Melrose in 2003. It was a similar structure to Rosebank. It started as a cash shell, which Investec was involved with. And then as time evolved across the acquisitions through Melrose, Investec acted as advisor and underwriter on those transactions. And there's a phenomenal track record there. And I think it was an obvious evolution into Rosebank. Hopefully Investec's name was fairly synonymous and was an easy decision for Simon have us as part of the syndicate for Rosebank. And you know, we've had these two raises now and we've gone on to be an advisor and underwriter on those transactions.

Simon Peckham: I mean, relationships are fundamental to everything we do. So we tend to keep and nurture relationships with people all the way through the process. And actually, we go back with Investec all the way to 2003. They've been fantastic for us as indeed, there are other advisors, but Investec is sitting right next to me, so I shouldn't be too nice about everyone else at the moment. Actually to be honest, while I'm talking about it, I think AIM were fantastic for us as well. I mean we raised 1.2 billion, then 1.9 billion on the AIM market. We found it a very quick, effective and speedy process to do that. We actually managed the original flotation of Rosebank I think in about four weeks. So we would be big fans of people if they want to come to the marketplace and go through the AIM market. We're not leaving AIM for any reason other than it's part of our growing up process. We do have some of our bigger investors who couldn't invest this when we were on AIM. So there was a moment when it was time to move on. But basically what a fantastic marketplace it was for us. 

Adam Bidwell: I think there are challenges in the UK that have been well publicised around fund flows. 
You know, Rosebank is in the enviable position of having a long track record, a big fan base, lots of investors that that want to bank them. And when Rosebank came along, there was a long list of people that wanted to support them. So yes, it was record-breaking numbers. I think what it shows is that the capital is out there. You know, Rosebank has a strong list of UK supporters, but also a global shareholder register across the US sovereign wealth funds. So yes, they have, a strong track record and a very strong investor base. But it shows the money is there for the right management teams and the right transactions. 

Simon Peckham: Look, I think the stock markets fit the purpose of trading shares and raising money. And, you know, these are records that I hope and expect will get beaten or they should get beaten by someone else. And I look forward to reading on the paper someone else has done it. So there's no reason why you can't, as a UK company quoted on the London Stock market, realise money to go and do what you want to do. You just have to convince people that you can do that, that you've got the right management team, you've got the right idea. And then which case I would very much encourage people to go and raise their money and go and do it.

Adam Bidwell: I think that they are really big raises. They're headline raises that the market can turn to and look at and say, wow, the capital is there. Look, it does need to be the right deal and there are challenges in the UK. But for the right management teams doing the right deals, the capital is there. So I do think they are quite strong indications to the market that the capital really is there. I'm going to let Simon speak about their expertise, but they're phenomenal at it. People are interested in it and people want to back them. So as I say, for the right deals, the capital is there.

Simon Peckham: There is no reason why in this world of international relationships, you shouldn't have people who want to buy and want to invest in companies on the London Stock market. You just want the right idea and management teams to have the confidence to go and raise it and go and say to people, look, here's the idea, let's go and try and make this happen. And I don't see any reason why we can't do that now. There are well publicised things about UK institutions not investing as much in the market. I actually wish they did invest more. I'm now old enough to have seen the history of that well recited number that is reduced. But the whole point of that is that we should go and try and raise money from markets wherever they are and investors wherever they are. And there's no reason why UK companies can't do that. And you know, we find a strong investor appetite for the UK quoted market overseas. Just have the right idea, have the confidence and go and do it.

Simon Peckham: Oh, look, we've achieved nothing at the moment. So, basically our job is to deliver on the promises we've made to our shareholders. That's the number one thing. That's the thing that gives us the opportunity to the future. And that's the only thing we're really focused on right now. So we've got to deliver what we asked for. They have trusted us and given us that access to investment. It's our job to be right for that trust. So that's the first thing we need to do. And then this is not the end of the journey. I don't see any reason why this isn't just the start of the journey. I mean, we'd like to raise more money from them to do more acquisitions. There's no reason why Rosebank can't continue forever, it may not be me forever, I'm not quite that optimistic, but you know, for as long as absolutely possible for me. But there's a whole team of very talented people at Rosebank and we are basically going to try and drive Rosebank further forward and make more and more opportunities here and hopefully deliver value for everyone in that process.

Lauren Crawley-Moore: Sky's the limit

Simon Peckham: I think that suggests that we want to get bigger and bigger and bigger. We don't. We just want to get better and better and better. So bigger is not necessarily what we're after. What we're after is the right returns for our investors. And that's our job and that's what we need to do. And if we do that, then we'll get more trust and we'll get more opportunity to go and raise more money and go and deploy into other assets. And also it's great fun doing this. I mean, we have a wonderful opportunity to take businesses that are underperforming their potential and make them better. And actually the one of the greatest joys and the great fun is working with a great bunch of people to do it. I have some fantastic people work with me at Rosebank and also watch the businesses as they improve and watch the management teams and the people in those businesses really enjoy it, as we managed to take those businesses and perform amazing.

 
Lauren Crawley-Moore: And actually having you both here today is a demonstration of how important that kind of teamwork is in in achieving these goals. Simon, Adam, thank you so much for joining us. For more information about Investec, you can visit their Marketplace profile page on the London Stock Exchange Issuer Services platform. Thank you very much for watching.