Blame union not me for a Christmas Day bombshell
Top investor rejects ‘heartless’ jibe over closure of City Link
JON Moulton became a hate figure last month when parcel firm City Link went bust on Christmas Day. As head of the private equity firm that owned the company, he was accused of heartlessness and profiting from others’ misery.
Moulton calmly dismisses both suggestions, reeling off the sums lost by his investment company and himself personally, blaming the unions for the seemingly cruel timing of the news.
‘That it would have to cease trading over the Christmas period was obvious, but the announcement was never intended to be on Christmas Day,’ he says. ‘That resulted from extreme pressure from the trade union, who were trying to get the story on the news. This resulted in the administrator announcing it on Christmas Day with reference to us. The first I knew was when my phone jammed with calls.’
During a long career in private equity, which has earned him a fortune estimated at £225 million, Moulton has become an iconic figure in the sector. He has been involved in rescues or attempted rescues of a host of well-known businesses from Parker Pens in the 1980s to the more recent takeover of Jaeger. In 2000 he shot to fame when he made a bid to
I like 60 per cent of Nigel Farage’s policies – but he hates windfarms and I own some
take over car maker Rover which was on the verge of collapse with 10,000 jobs at risk. He lost that battle to a rival bid. Rover eventually collapsed five years later. Moulton has long argued that his plan would have kept Rover alive. That was also his objective for City Link.
When the City Link news broke Moulton was at home with his wife in Guernsey, celebrating Christmas. But he says he does not expect sympathy for his shattered Christmas peace. He adds: ‘The people who deserve sympathy are the employees and contractors, whose personal loss was proportionately more important than the loss I have taken.’
On this point he is also clear: Better Capital’s investment fund, which owned City Link, had lent £40million to the firm since taking it over in 2013. About £20 million of that was lost. Most belonged to investors who had put money with Moulton’s company, but he too was left out of pocket. He says: ‘My share of that loss was about £2million.’
Known for his directness, the 64year-old delivers his views with cold precision. It would almost be coldly clinical, were it not for a constant undercurrent of dry humour. He is often quoted as saying that insensitivity is both one of his strengths, but also one of his faults. ‘It is a double-edged sword,’ he admits.
Controversy like that at City Link goes with the territory for private equity investors specialising in turnarounds. Better Capital has taken several businesses since the financial crisis. Overall, though, Moulton says its two funds are doing fine. ‘The first has one extremely successful aerospace company in it,’ he says, referring to Gardner Aerospace, which has seen sales rise from £50million to well over £100million since it was taken over.
‘The second fund is younger,’ he says. ‘It contained City Link. The total loss of £20million amounts to about 4 per cent of that fund.’
Moulton argues that dealing with rescues inevitably means being associated with some failures, and the nature of the economic crisis of 2008 means there are a large number of companies that have been teetering on the brink for some years.
Because of ultra-low interest rates, many firms have, in Moulton’s words, ‘staggered on as the living dead’. This, he argues, is not a good thing for the economy.
He says: ‘We have lacked something a bit Darwinian, good people and good assets have remained in bad businesses and that is some part of the lack of productivity in the economy.’ He adds: ‘Really that is a waste of people’s lives.’
But he admits the economic recovery has surprised him. ‘I was a doom and gloom person until two years ago,’ he says. ‘But it has done better than I expected. However, we still have massive government debt, the obvious debt of gilts [bonds issued by the Government when it needs to borrow money], but also huge unfunded pension commitments.’
His hawkish view of public debt could be assumed to put him in Chancellor George Osborne’s camp and he has been a Tory supporter in the past. Recently his name has been linked to Ukip, but he dismisses suggestions he is a major backer.
‘I have been to a couple of Ukip meetings, but I don’t vote in Britain. I like at least 60 per cent of Nigel Farage’s policies – the stuff about Europe. But he disagrees with me violently on at least one thing, I own some windfarms and he hates them.’
Pondering the future of Europe, Moulton takes an unequivocally dim view. QE for the single currency is ‘a last desperate throw’ in a project that was ill-conceived from the start, while Greece was allowed in on the back of dubious economic figures. He says: ‘Once they were in, I think the technical term is they took the p*** with Europe’s money.’
Moulton shows no sign of retirement though his own pension is undoubtedly well-funded. As well as leading Better Capital, he is chairman of the Guernsey Stock Exchange and the local airline and a London stockbroking firm.
A fan of video conferencing, he manages to avoid being constantly on the move, but is almost constantly busy. When he does relax, it is on walks with his wife, playing tennis and chess. Is he any good at chess?
‘I’m happy to play for a small amount of money,’ he says. So I explain that I am a terrible chess player. ‘Well in that case, even more money,’ he quips. I’ll pass on that.