© Reuters. Swedish entrepreneur Melker Schorling, significant shareholder of the security companies Securitas and Assa Abloy, is seen in this file picture taken in Stockholm
By Mia Shanley and Niklas Pollard STOCKHOLM (Reuters) – Business magnate Melker Schorling, one of Sweden’s most prominent financiers, says he is well-positioned to expand his 60 billion crown ($ 7 billion) financial investment empire even as he prepares to hand over affairs to his children. MSAB, the holding business he established in 1999 which spans a diverse set of companies from measurement technology to locks and guards, has consistently surpassed bigger rivals. Financiers attribute Schorling’s success to a propensity for picking little specialists which go on to become worldwide market leaders. In a years, MSAB has actually had returns of over 500 percent, outshining competitors such as Wallenberg-backed Investor AB and Industrivarden and leading Swedish media to dub Schorling “King Midas” of the Stockholm bourse. MSAB investors include H&M chairman Stefan Persson and BP (LON:-RRB- & AB Volvo Chairman Carl-Henric Svanberg. However while Schorling’s course to success has had few bumps, some experts are beginning to question the future of the group which has not made a single brand-new investment in a decade. Schorling turns 70 next year and although his daughters have actually ended up being more involved they have not yet stepped into high-profile executive roles, and he just recently lost one of his closest team members, MSAB CEO Ulrik Svensson, who leaves at year-end to sign up with Lufthansa as CFO. Svensson’s departure raises some concerns about the group’s instructions and stability, experts say. Schorling, who avoids media appearances, is not planning significant modifications. “We are really long-term oriented and it is highly most likely that our holdings will be the exact same for several years to come,” he told Reuters in an e-mail. However opportunity may be on the horizon for MSAB which has six noted companies like Assa Abloy, the world’s biggest maker of locks, Securitas, the world’s second-biggest carrier of guards, and Hexagon, market leader in accuracy measurement innovation. “For the time being we have actually divested a bit from our holdings to make certain that we have enough dry powder for future financial investments,” he stated. “Assessment multiples are high at the moment and our team believe there could be intriguing investment opportunities in the future.” While Brexit concerns have hit shares – the STOXX Europe Industrial Item & & Solutions Index is down 8.5 percent on the year – the remains at record highs. Nordea analyst Elias Porse reckons Svensson’s departure might trigger a “generational renewal” of MSAB, with among the children stepping in as CEO, though a CFO from a portfolio business could be selected rather. Both Sofia and Marta are board members for MSAB and its investment companies. “Ultimately they will take control of but we do not have a particular timing for that,” Schorling stated. Schorling and his CEO proteges are bellwethers for investors who will be seeing any financial investment moves closely. Last year, when Schorling and Hexagon CEO Ola Rollen bought into finger print sensing unit maker Next Biometrics through their high-tech focused Greenbridge Partners, shares almost doubled on the day. Shares in mining gear maker Sandvik leapt when Assa Abloy’s CEO was called chair. Those near Schorling say he has an eye for skill. He insists his leaders take big stakes, so they reap the benefits or bleed together. Rollen’s own wealth has actually increased because taking the job in 2000, when he took an unsecured loan equal to two years’ income to purchase choices – a big bet by Swedish requirements. “Had I been older, better and had the ability to do the mathematics nicer at the time, I would probably never ever have actually done it,” he stated with a laugh, reviewing his monetary gamble. Simply his Hexagon B shares are now worth almost $50 million. Schorling believes he may have “an excellent suspicion for individuals”. He searches for entrepreneurship, long-term thinking and a “very healthy lack of administration” in all his CEOs. Unlike the current generation of Wallenbergs who acquired huge financial investment empires, farmer’s son Schorling constructed his fortune on a first bet on Securitas for which he took an enormous bank loan for. In 2014, he was the sixth wealthiest Swede, according to publication Veckans Affarer. His group’s net asset value falls simply short of Industrivarden’s. It and Financier are the standard investment leviathans of Swedish company. Still, MSAB coped the 2008 crisis when financial obligations at Hexagon, its crown jewel at over half its portfolio, sent shares in both toppling. Hexagon’s net debt-to-equity ratio has given that more than cut in half. Instead of transforming money handling company Loomis early on as countries like Sweden moved towards being cashless, MSAB whittled down its holding in March this year. Another bad move came when Securitas spun off its hi-tech Niscayah system in 2006 and ended up getting outbid by Stanley Black & & Decker (NYSE:-RRB- when it tried to buy it back five years later on. MSAB is closely tied to the highs and lows of the commercial cycle. Asked about this, Schorling said there were no strategies to change the asset mix to even things out. “We do not think in diversity terms,” he stated. “Some of the companies are impacted by the commercial cycle but they have actually been well tested in the financial crisis.” MSAB will likely keep growing through M&A by its holdings. “They do have the advantage of synergies which indicates it is a lot easier for them to make an excellent return on an acquisition,” Schorling stated. A senior lender who has actually worked with a few of Schorling’s companies explained his style as highly reliable. “It would have to be an actually huge financial investment or M&An offer for it to be raised up centrally to top management,” he said. Schorling might remain in the motorist’s seat for a long time to come. Carl Bek-Nielsen, an MSAB board member and chair of United International Enterprises – its 3rd most significant investor – stated Schorling was not stepping down anytime quickly. “I bet you if he were a vehicle and you opened up his bonnet, there would be a wonderful V8 engine well lubed and all set to go another 400,000 kilometers,” he informed Reuters. ($ 1 = 8.1262 Swedish crowns).