Leahy backs investment company Selkirk eyeing subsidiary takeovers

Sir Terry Leahy, the former Tesco boss, is among the backers of a new investment company set to launch on London’s junior market this week that wants to buy an unloved and undervalued subsidiary of another listed business.
Selkirk is due to join Aim on Thursday. As part of the initial public offering, it has raised £7.5 million from investors, including Leahy, 68, who is expected to own a stake of about 10 per cent.
Other investors include Ed Woodward, the former chief executive of Manchester United, and Oliver Hemsley, the founder of City stockbroker Numis.
Selkirk will use the initial £7.5 million to fund due diligence on potential takeover targets. It is looking to take advantage of the so-called “conglomerate discount” where companies that sit within a wider group are valued more cheaply by the stock market, partly because investors are not convinced that they are being run as efficiently or with as much focus as standalone businesses.
The board, led by chairman Iain McDonald, who was an early investor in businesses such as ASOS and THG, expects the first investment to be a business in the consumer, technology and digital media sectors. It will look at all sizes of companies, from £30 million up to as much as £1 billion.
Although it would consider buying a private company, management is particularly keen on acquiring the subsidiary of a larger listed group for which a standalone listing “could help unlock material value”.
“It is our belief that some of the most promising and undervalued businesses are hidden within UK-listed conglomerates,” McDonald, 53, said. “Our intention is to unlock the value of such a business within the technology, consumer or digital media sectors.”
Angus Monro, a former Marks & Spencer executive who served on the board of THG until 2020, will join Selkirk as a non-executive director, as will Alan Bannatyne, who was the long-time finance chief at Robert Walters, the listed recruiter, until last year.
McDonald added: “We have assembled an experienced management team and board which we will look to expand and deepen further as a target is identified. This includes the ability to work with existing management teams.”
He said Selkirk would be able to provide a business with a “highly incentivised management team with strategic direction”.