Melrose shows credentials as it returns capital

MELROSE, the industrial turnaround investor pursuing Charter International, said it was returning £373m to its investors yesterday after completing the sale of one of its investee companies.

Melrose used its £377m sale of metal casting business Dynacast to demonstrate its successful turnaround track record and value addition credentials to reinforce its position as a good buyer for Charter.

Under its ownership, it said Dynacast’s equity value had quadrupled; its enterprise value rose 98 per cent; and the £439m it had invested in both Dynacast and plastics group McKehnie had generated £1bn cash.

The 75p-per-share return of capital to shareholders – about 14 per cent of Melrose’s market capitalisation – would reduce total shareholder equity to £50m, it said, while the group had grown to a £1.4bn capitalisation.

The bullish update also said its latest buyout, of landmark engineering group FKI, had seen its equity value increase more than 2.5 times already.

“The FKI acquisition is another demonstrable example of how Melrose has successfully restructured and improved businesses to create value for shareholders,” it said in a statement.