John Hargreaves, who took the chain private in 2006, has secured a 525m funding package from investors after abandoning attempts to sell the 200-store chain for 1.5 billion earlier this year.
Matalan yesterday said the proceeds of the deal would back its growth strategy as well as finance a pay-out to Hargreaves.
The bumper dividend is thought to be among the biggest for a UK retail company, but still does not come close to the 1.2 billion pocketed by Topshop owner Sir Philip Green in 2005.
Matalan said: "The proceeds of the capital raise will be used to refinance the company's existing debt facilities and to finance a distribution to shareholders."
Hargreaves is the firm's only shareholder. Chief executive Alistair McGeorge said strong demand from investors for the capital raising was "encouraging given the state of the debt markets".
He added: "Following three years of improved trading and results, which has been accompanied by a rapid pay down of debt, we are pleased to have completed a refinancing that will underpin our growth for many years to come as we execute our growth strategy as an independent company."
Matalan has announced plans for a major expansion programme, which could see as many as 100 new stores opened in the years ahead. Recent trading figures showed like-for-like sales were up by 9.3 per cent in the 13 weeks to 2 January.
Hargreaves, who opened his first store in Preston in 1985, took the retailer private in an 827m deal backed by 410m of debt.