The mistake that cost me millions, by fallen private equity tycoon
Better Capital II is a wreckage, says veteran Jon Moulton
THE Grinch who ki l l ed Christmas’, ‘balding Bond baddie lookalike’, ‘ heartless’. These are just a few of the rebukes that have been flung at private equity veteran Jon Moulton. But despite regularly attracting fury – and latterly a degree of ridicule over the ‘wreckage’ of his latest fund at Better Capital – Moulton does not shy away from discussing his troubles.
‘Happy to oblige,’ he says, when asked to do an interview with The Mail on Sunday. ‘Provided you agree not to add horns to my picture!’
He’s not joking. ‘ It’s happened before,’ he adds when we meet in the Churchill Room of his townhouse office – so named because it features a signed portrait of the former Prime Minister – on a quiet street off Victoria Embankment Gardens in Central London.
Moulton, who today arrived at his office at 9.50am having commuted in from Guernsey, is referring to the time a tabloid newspaper dubbed him their ‘villain of the week’ and superimposed a pair of devil horns on his head for good measure.
He was given the status of ‘villain’ – as well as ‘Grinch’ – in December 2014 after City Link, a delivery firm owned by Better Capital, collapsed on Christmas Eve leading to thousands of job losses. Moulton, 67, believes the reputation of the private equity industry has improved
High street retail has been a hard game and perhaps we should never have gone near it
in recent years – firms pay more tax, he says, and ‘the image of some bloke rolling up in his Bentley and firing three quarters of staff simply isn’t real’.
Surely City Link’s collapse did some damage to the reputation of the private equity industry? ‘I think that’s an unfair statement,’ says Moulton, a millionaire who drives a Volkswagen Up, rather than a Bentley.
‘The timing was diabolical. But, in the way it was run, I don’t think private equity did anything wrong, I don’t think we did [ anything wrong]. We had chosen an industry that was ferociously difficult.’
Moulton describes the experience as ‘awful’ and he personally lost an estimated £2 million on City Link. But the private equity baron, who lives in tax haven Guernsey and has an estimated personal wealth of around £ 180 million, has certainly experienced worse.
Growing up in Stoke-on-Trent, he suffered a series of serious and rare illnesses as a child.
To name a few: tuberculosis, aplastic anaemia and amoebic dysentery – ‘it was bloody horrible, and took weeks to diagnose because, of course, nobody has it’.
But a comparison with his unfortunate youth will do little to soften recent blows suffered by Moulton and his financial backers, who include Phones4U founder John Caudwell. Losses on Moulton’s sec- ond and last Better Capital fund – l aunched i n 2012 – have been estimated at more than £140 million, thanks to the troubles of City Link, fashion brand Jaeger and double-glazing firm Everest.
Moulton openly describes the fund as a ‘ wreckage’. He had planned to wrap it up around now, but i nstead fears i t will t ake between 18 months and four years to finally lay it to rest and sell off its remaining investments.
Over an often sparkling, decadesl ong career i n private equity, Moulton established himself as an expert in turning around struggling businesses. The first Better Capital fund made ‘ respectable’ returns, he says. But Better Capital’s 2012 fund threatens to taint his legacy, and he admits to harbouring major regrets.
‘ It’ll be the worst fund of my career. It’s pretty obvious from the numbers… Do I wish I hadn’t done that second fund? I think that would be fair. I put a lot of money into it, an immense amount of time. I’ll get a very poor economic return, my investors will get a very poor economic return, and I’ll have buried quite a lot of my life into it.’
Moulton partly blames the economy for his struggles, but admits to some personal failures also. ‘It’s all of the above – every one’s a different story that’s gone right or wrong,’ he says.
‘Clearly high street retail’s been an extremely hard game and we should probably never have gone near it. That was just a mistake at that time. Others have been troubled because of poor management,
Bearing in mind I’m coming up to 68, I’m not planning anything new, I’ll be happy to be alive
poor market position, poor systems.’ He adds: ‘The available population of deals for turnarounds has been really quite thin, and so we’ve been selecting from nothing like the range we would like to.
‘If you have a look at the relative faring to virtually all the turnaround funds over the last decade, nobody has done well.’
He says funds focused on turning around ailing firms have been fighting over companies so badly damaged they are often unsalvageable by the time banks let them go.
‘They’ve carried on being funded by the banks much, much longer than anybody expected, and the low interest rates have enabled that to happen.
‘In 2008 it looked like it was going to be a bonanza for turnaround, but it absolutely wasn’t.’
Moulton has made a long list of enemies during his decades in the business world. He has clashed with former Jaeger boss Harold Tillman who was unhappy with the way Better Capital took control of his company in 2012 and Moulton tells proudly of the time a former colleague in the US hurled a chair at an office wall after being given his appraisal.
But few will delight more in Moulton’s struggles than some of his former workmates at Alchemy Partners.
Moulton shocked the City in 2009 when he quit the firm that he had founded and sent a widely circulated letter to investors criticising its new managing partner.
He signed off the letter with the words, ‘I would do it again – but better,’ and shortly afterwards launched Better Capital. In addition to his Better Capital commitments, Moulton has more than 100 investments through his family office – including in Funding Circle, the peer-to-peer lender which listed on the London Stock Exchange last week.
He al s o chairs t he Channel Islands’ International Stock Exchange, FinnCap and biotech start-up AMR Centre, and – because of his interest in chemistry – is a trustee of the Stem Cell Foundation and has his own clinical research charity. In addition, Moulton is politically active, and is a director of the Institute for Policy Studies.
The Brexit-backer is concerned by the prospect of a Labour Government, but no longer donates to the Conservative Party: ‘I’m fairly safe from having to donate now, because I live in Guernsey.’
Moulton, who travels over to London from Guernsey 25 times a year for business, insists his wife Pauline – whom he married more than 40 years ago after meeting in a Stoke youth club – is ‘well used to the idea that I work long hours and that holidays will involve quite a bit of time crouched over a computer or a phone’.
But, as he approaches his 70s, Moulton is preparing to scale down, and says the doomed Better Capital 2012 will be his last major turnaround fund when he winds it up in the coming years.
‘Bearing in mind I’m coming up to 68, I really think I should be doing some of the things I should have been doing years ago,’ says Moulton, who recently returned from a holiday t o Borneo and Cambodia.
‘So I’m not planning anything new – I’ll be perfectly happy to be alive.’