Melker Schorling: Sweden’s quiet billionaire with the Midas touch

Business tycoon Melker Schorling, one of Sweden’s most prominent investors, says he is well-positioned to expand his 60 billion crown ($7 billion) investment empire even as he prepares to hand over affairs to his daughters.

MSAB, the holding company he set up in 1999 which spans a diverse set of companies from measurement technology to locks and guards, has consistently outperformed larger rivals.

Investors attribute Schorling’s success to a knack for picking small specialists which go on to become global market leaders.

In a decade, MSAB has had returns of over 500 per cent, outperforming rivals 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 & AB Volvo Chairman Carl-Henric Svanberg.

But while Schorling’s path to success has had few bumps, some analysts are beginning to question the future of the group which has not made a single new investment in a decade.

Schorling turns 70 next year and although his daughters have become more involved they have not yet stepped into high-profile executive roles, and he recently lost one of his closest team members, MSAB CEO Ulrik Svensson, who leaves at year-end to join Lufthansa as CFO.

Svensson’s departure raises some questions about the group’s direction and stability, analysts say.

Schorling, who shies away from media appearances, is not planning major changes.

“We are very long-term oriented and it is highly likely that our holdings will be the same for many years to come,” he said in an email.

But opportunity may be on the horizon for MSAB which has six listed companies like Assa Abloy, the world’s biggest maker of locks, Securitas, the world’s second-biggest provider of guards, and Hexagon, market leader in precision measurement technology.

“For the time being we have actually divested a bit from our holdings to make sure that we have enough dry powder for future investments,” he said. “Valuation multiples are high at the moment and we believe there could be interesting investment opportunities in the future.”

While Brexit worries have hit shares - the STOXX Europe Industrial Goods & Services Index is down 8.5 percent on the year - the S&P 500 remains at record highs.

Nordea analyst Elias Porse reckons Svensson’s departure could trigger a “generational renewal” of MSAB, with one of the daughters stepping in as CEO, though a CFO from a portfolio company could be appointed instead.

Both Sofia and Marta are board members for MSAB and its investment companies.

“Ultimately they will take over but we do not have a specific timing for that,” Schorling said.

Schorling and his CEO proteges are bellwethers for investors who will be watching any investment moves closely. Last year, when Schorling and Hexagon CEO Ola Rollen bought into fingerprint sensor maker Next Biometrics through their high-tech focused Greenbridge Partners, shares nearly doubled on the day. Shares in mining gear maker Sandvik jumped when Assa Abloy’s CEO was named chair.

Those near Schorling say he has an eye for talent. He insists his leaders take large stakes, so they reap the benefits or bleed together.

The writer filed this report from Stockholm