Selkirk Group PLC, a shell company founded by two early backers of Hut Group owner THG and with funds from Kelso Group Holdings PLC (LSE:KLSO), is looking to raise £7.5 million in an AIM float in order to target the acquisition of a single company valued between £30 million and £1 billion.
The company is led by executive chairman Iain McDonald, the former chair of THG and an early investor in ASOS PLC (LSE:ASC), Anatwine and Eagle Eye Solutions Group PLC (AIM:EYE), who also sits on the board of Boohoo Group PLC (AIM:BOO).
McDonald, who this year stepped down from THG after 14 years, wants to buy "an undervalued company or business in the UK" in the consumer, technology and digital media sectors.
Selkirk will cast its net among private and listed companies as well as subsidiaries of listed companies "which management believes are undervalued and have considerable value upside".
Assuming a £7.5 million raise, McDonald's Belerion Capital vehicle is committing to providing 18% of the funds, while Selkirk has also agreed to £1.5 million of the funds being provided by a subsidiary of Kelso Group, an activist investor that had targeted the removal of THG's chair earlier this year and criticised his "lack of action and clarity".
"At the time of its first acquisition Selkirk will work with industry specialists to add value to the acquisition and maximise returns for shareholders," the company said in a statement.
McDonald, along with proposed independent non-execs Angus Monro (ex of THG, Marks & Spencer and Arcadia) and Alan Bannatyne (former Robert Walters CFO), intend to raise equity and/or debt finance to fund the acquisition once a suitable target is found and will "focus on enhancing shareholder value over the long term".
"The directors believe that Selkirk is positioned to deliver private equity style returns on the public market, utilising AIM's flexible framework to capitalise on growth opportunities."
In a separate statement, Kelso said the investment in Selkirk will be the first under its new strategy of providing seed investment in "listed single company acquisition vehicles which target listed, unlisted and divisions of undervalued UK businesses where we believe there is considerable upside".
Kelso chair Sir Nigel Knowles said: "We are pleased to have created Selkirk and that it has partnered with Belerion Capital to create value within its defined sectors.
"We are pleased to support AIM with Selkirk's IPO which we believe, despite a large reduction in companies listed in recent years, is one of the best growth exchange platforms in the world."