£10m cash call by the City elite

FOUR of the City's best known entrepreneurs will float their new company, Melrose, on the Alternative Investment Market on Tuesday with initial plans to raise £10m.

Chris Miller and David Roper, co-founders of mini-conglomerate Wassall, their ex-colleague Simon Peckham, and Miles Templeman, former head of Whitbread, have attracted backing from nine major institutional investors.

The quartet have committed £2.5m to Melrose, a shell company designed to make acquisitions of up to £500m, but the remaining funding has been raised from investors, including Gartmore, Isis, Schroders, Jupiter and Fidelity.

The four entrepreneurs will use Melrose to bid for under-performing companies. 'They will act as agents for change,' said one City banker.

Wassall was worth £2 million when it was founded in 1988, but was sold 12 years later to American venture capital firm Kohlberg Kravis Roberts for £627m. Melrose marks the return of its founders to the City.

The company is aiming for a full listing after it makes its first acquisition.

Executive chairman Miller believes there is a demand for investment vehicles that will allow investors to realise cash for underperforming shares, and take shares in the new vehicle which allows them to share the upside of any turnround.

Melrose will focus on single businesses rather than build a portfolio of assets in different industries.