Small Talk: Hopes high as MeDa Vinci gets a new Dutch master

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The Independent Online

A former top Philips executive is to take the helm of MeDaVinci, the AIM-listed investment company. Rob Westerhof, who headed Philips's Asia, North American and Medical Systems business during a 35-year career at the Dutch electronics giant, will today be appointed chief executive of MeDaVinci.

The company will also unveil a £1.7m fund-raising. Of this total, Mr Westerhof is to inject £1m of his own money, giving him a stake of 35 per cent in the business. The cash will go towards MeDaVinci's existing reserves. It will be used to invest in technologies being developed by universities and to back inventors who lack the capital or know-how to commercialise their ideas.

MeDaVinci, under Mr Westerhof's leadership, will only consider situations where it can act as a lead investor and where it can have a board presence. It wants to occupy that niche of the market that is too small or nascent to attract major medical companies. With MeDaVinci's money, guidance and support, the aim will be to grow portfolio companies to a size where they can either be purchased by a bigger player or floated on the stock market.

Given Mr Westerhof's experience, he should be able to provide the AIM company with plenty of deal flow. Alongside his time at Philips, the Harvard-educated businessman served as a president of the Dutch football club PSV Eindhoven.

He is believed to have already identified several potential investments which are likely to be unveiled in the new year. These include a revolutionary blood diagnostic technology which enables on-the-spot analysis with the use of only one drop of blood and a device to monitor diabetes, an illness that affects millions worldwide.

MeDaVinci's sole investment at present is a 19 per cent stake in ErgoDynamics, a developer of an automated system for the relief of back pain.

Hanover's chain reaction

Shares in Renold roared to fresh five-year highs last week as investors started to wake up to the scale of the possible recovery at the industrial chain maker. The renaissance at the group has been engineered by the activist investment firm Hanover, which controls 15 per cent of its shares.

Following successes at the speciality chemicals group Elementis and the promotions firm 4Imprint, it has pushed through reforms at Renold which have returned the company to the black in a big way.

However, the City looks to have missed the fact that Hanover also holds a 15 per cent stake in Cosalt, a mini-conglomerate. Alongside the investment firm is David Ross, the multi-millionaire co-founder of Carphone Warehouse. Among its businesses is a holiday home and caravan maker, an operation making school uniforms and one producing and servicing marine and industrial safety products.

Cosalt has been overlooked because of its poor performance and lack of focus. Over the past couple of years, it has gone from generating around £6m a year in profit to being loss-making. It registered a deficit of £1.1m in its last financial year.

But this state of affairs is unlikely to go on for much longer given that Hanover and Mr Ross control a third of the company.

In fact, with the recent appointment of a new chief executive, Per Jonsson, the process of shaking up the company up has started. Cosalt is looking to sell its school uniforms business and focus on its marine safety operation which enjoys near-monopoly status and was bolstered last week via an £8m acquisition. Although a profit warning in August knocked Cosalt's shares, Small Talk readers can expect a good recovery at the company as Hanover and Mr Jonsson get on with rationalising its operations.

Hanover's modus operandi sees it take sizeable stakes in unloved companies and push through a major restructuring. Since the investment group bought into Renold its shares have more than doubled. At Elementis and 4Imprint, Hanover managed to triple the value of its investment. Readers should not be surprised if it enjoys similar success at Cosalt.

Telecom plus firing on all cylinders

In August, Small Talk urged readers to take a punt on Telecom plus, the provider of gas and electricity as well as mobile, fixed-line and broadband services. Back then, its shares traded at 121p. On Friday, they closed at 193p, thanks to a strong set of interim results earlier in the week.

Telecom plus unveiled a 9 per cent rise in first-half profits to £5.5m and said it was confident of delivering full-year profits ahead of its previous best of £10.5m. Earlier in the year, it suffered losses at its energy business after failing to hedge its supply contracts.This has been solved and it looks to be firing on all cylinders.