Oldbury Aluminium Alloys co-owner and joint managing director Jonathan Gadsby has led a management buyout of the company for an undisclosed sum.

But the funds to back the move had to come from London because Midlands financiers did not want to know.

Mr Gadsby has bought out fellow joint managing director Paul Evitts.

The Halesowen-based company is involved in the manufacture of secondary aluminium ingots from recycled aluminium waste.

Secondary aluminium is primarily used as the raw material for the aluminium die-casting industry, where the properties of the alloy provide excellent melting and flow characteristics as well as energy-saving advantages.

The company has grown strongly in recent years, from sales of £3.9 million in 2001 to around £8 million today.

This growth has been on the back of a reputation for customer service and excellent supplier relationships, including recycling products from the automotive industry.

The company generates net margins in excess of ten per cent and has significant growth prospects arising from both the current emphasis on recycling of waste and also its strategy of moving into magnesium ingot manufacturing which is expected to become a high growth area for the business in coming years.

Mr Gadsby originally bought in to the company in 2003 with the intention that Mr Evitts' remaining shares would subsequently be acquired and loan notes redeemed.

Mr Gadsby has rolled over his entire shareholding into the new venture, and wider employee share ownership has been achieved with a share option scheme.

The transaction has been backed by an equity investment totalling £1.4 million from Elderstreet VCT and Elderstreet Millennium VCT in return for a significant minority stake, along with a £2.7 million debt package arranged by the Birmingham office of Yorkshire Bank.

The funding was used to re-finance existing bank debt and loan notes as well as to acquire Mr Evitts' shares. David Taylor, who made the investment on behalf of the Elderstreet funds, joins the board.

The Birmingham office of RSM Robson Rhodes, led by Martyn Pilley and Steve Bishop, acted as corporate finance advisers to Mr Gadsby while the Heatons team of Paul Wakefield, Rob Parry and James Melen were legal advisers. Both firms had advised on the original transaction.

Graham McGuiness and Ian Howey arranged the debt package for Yorkshire Bank, with due diligence undertaken by Graham Elsworth and David Billington of BDO Stoy Hayward. Alistair Hardie of Martineau Johnson acted as legal adviser to the bank, while Mike Ward of Gateley Wareing advised the vendor. Legal advisers to Elderstreet were Tessa Laws and Joss Alcraft of Rosenblatts.

Mr Gadsby said: "Paul Evitts has done a fantastic job in establishing Oldbury Aluminium as a leading player in the secondary aluminium market. We have the team to continue growing the business in our core area while targeting new industries."

Mr Pilley said: "It seems ironic that we had to go to London to obtain funding for a Black Country business, but Elderstreet were quick to identify the opportunity and get to the bottom of the post-Rover market. The lack of Birmingham venture capitalists focusing on this size of investment was apparent."

Ian Howey, acquisition finance partner at Yorkshire Bank, commented: "Yorkshire Bank is committed to building its business in the Midlands and is pleased to back an exceptionally strong performing business which shows that industry can prosper in the region by capitalising on the wider market opportunity of reducing waste and recycling."