Kelner, who edited The Independent for 13 years before his 2011 departure, will serve as chief executive of the BMB-owned agency.
Seven Dials will offer reputation management at chief executive level, day-to-day PR coverage and support with clients’ own-branded publications.
Kelner said: ‘I think we’re a grown-up PR agency. One of the things I am very keen on is that we should try not to use any jargon. You won’t hear anything about parallel tracking and 360-thinking, which I call PR bollocks.’
The agency will start with seven permanent staff, who will share BMB’s offices in London’s Covent Garden. Eleanor Conroy, a former director at Freud Communications, becomes Seven Dials' business director.
The firm will also have an advisory board including Simon Walker, the former comms secretary at Buckingham Palace, and Charles Wilson, the former Times editor.
BMB founders Andrew McGuinness and Trevor Beattie previously worked with Kelner when their agency held The Independent’s ad account.
McGuinness, who will serve as Seven Dials chairman, said: ‘Most clients aren’t looking for an all-in-one proposal but, if you offer them a credible way of accessing a best-in-class resource, many will do that.’
Kelner said: 'In a sense, we have the best of both worlds. We’ve got autonomy as a PR agency, but the ability to draw on BMB’s creative strengths and the infrastructure that they’ve built up.'
Seven Dials founding clients are upscale retailer Fortnum & Mason, investments firm Aberdeen Asset Management and the online drinks retailer 31DOVER.
The agency may also work with existing BMB clients, which include McCain Foods, Microsoft and Virgin Money.
BMB announced plans for a PR operation in 2010, but discussions over acquisitions fell through.
'We wanted to make sure we had a scalable business and to do it with proper investment and proper people,' McGuinness said.
BMB follows in the footsteps of fellow ad agency Karmarama, which launched PR venture Kaper in July 2010.