Better Capital boss Jon Moulton on Brexit, his firm's exit and why he still hasn't forgiven Liam Fox

 
Shruti Tripathi Chopra
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Director of the British company Alchemy, Jon Moult
Jon Moulton says it was always the plan to wind down investment vehicle Better Capital (Source: Getty)

Bald, bold and bespectacled, private equity veteran Jon Moulton has had more than his fair share of knocks as well as high points during a long career.

He was branded the Christmas Scrooge in December 2014 when City Link collapsed into administration leaving nearly 2,700 jobs at risk.

“We made a very bad decision to go in,” he admits frankly.

“It’s a very difficult industry to operate in and we underestimated the magnitude of the task. We did our best, lost £20m and moved on.”

So, what is serial dealmaker Moulton going to buy next? He won’t divulge details but it will be a “medium-sized engineer in the UK” that he will personally buy as he looks to wind up Better Capital, which he set up in 2009, next year.

“We prepared to wind down Better Capital since we started it.

“It did have finite life. People seem to find this concept rather strange but it was set up to eventually evaporate. The original intention was that the first fund would be dead by about 2018 and it seems likely to achieve that. We are not raising another turnaround fund, there’s little available in the turnaround world anyway.”

Apart from City Link, the other deal for which Moulton is most known is his failed attempt to buy MG Rover which was snapped up by the “Phoenix Four” and resulted in the company going bust in 2005.

The worst deal he ever made, according to him, is actually one that reaped a lot of money while he was at Schroder Ventures from 1985 to 1994.

“We funded a company called Newbridge Networks and sold out four years later for something like four times the money it was listed. If I had waited another year, it would’ve been 72 times the money. That’s the most expensive decision I’ve ever made.”

Will Jaeger bomb?

Womenswear retailer Jaeger has been something of a thorn in his side. In 2012, Better Capital bought a majority stake in the brand for £19.5m.

Last year Jaeger closed three stores including its Regent Street flagship. In October, it opened a two-floor, 2,000 square feet store on Marylebone High Street.

Moulton blames the heavy discounting witnessed on the high street for the sector’s troubles.

“Everyone seems to be offering clothes at minus 70 per cent and that really is a nuisance because it destroys the image of your brand, it is hurting lots of retailers. Even Burberry is not having an easy time.”

Read more: Private equity guru Jon Moulton considered buying BHS and Austin Reed

But he still believes in the brand. “We regularly get approached for Jaeger, there’s a lot of interest in the brand,” Moulton declares defiantly when quizzed on whether the iconic British brand has lost its place in the fashion world.

“We don’t see it going into administration otherwise we wouldn’t be sitting here. From reducing prices of the clothes to shutting shops, we’ve considered all the options you could imagine.”

In a career spanning over 30 years, Moulton has of course had his share of great deals.

“I’ve done quite a few deals where £2 has ended up as very large number."

Last month, Better Capital agreed a £38m sale of the Walkabout bar chain to Stonegate Pub Company, the owner of restaurant giant Slug & Lettuce.

“Probably more visible would be Parker Pens, the company losing something like £20m when we bought it and made £40m when we sold it.”

Defence sector to explode in 2017

Ask him about sectors that are set for ascendency in 2017 and he points towards the US President-elect’s tenure at the White House as a key factor. The defence industry could be a big winner.

“Trump’s arrival on the world is not to be underestimated,” Moulton says gravely. “We are definitely going to see protectionism but perhaps much more concern. The fundamental safety of the world is less than it was. Cold war-type activities with China and Russia and even Mexico look entirely possible.

“Trump has very strong views that Europe should be defending itself. I actually think defence is an area which will be really quite buoyant over the next couple of years as European countries have to get themselves some armies.”

Read more: Trump wants to seal a new trade deal with the UK "very quickly"

Brexit could boost London

Moulton has an answer for every question under the sun ­– apart from what Brexit will look like.

“I don’t have a clue. I don’t think anyone else has it either. There’s no chance we’re going to end up with anything but quite a hard-ish Brexit. What Mrs May is trying to do at the moment, I don’t know – not sure she does either.”

However, he suspects London could emerge as the winner of Brexit.

“One thing Europe definitely has done is generate absolutely ludicrous regulation. If London can attract the rest of the world to a more sensible system then that could actually be quite a big upside. Bear in mind, Europe doesn’t look very stable at the moment. London could remain strong with a stronger regulatory environment and suck capital and financial services.”

Why Moulton won't forgive Liam Fox

That brings us to the awkward topic of Brexit-backing international trade secretary Liam Fox. In 2011, Fox

resigned from the government following allegations surrounding the then-defence secretary’s former flatmate Adam Werritty.

Moulton was dragged into the story when it emerged he had given a £35,000 donation to a charity set up by Werritty. Moulton passed on all the evidence of the communication about the donation to then cabinet secretary Gus O’Donnell, saying at the time he felt he’d been “mugged”.

Moulton finds it quite “remarkable” that “no one seems to actually vet the reasons he left the cabinet as having any validity at all now”. He says he hasn’t forgiven Fox.

And in Moulton’s eyes, Fox is no great trade secretary either.

“I think he is just a loud voice but I’m not sure he’s been a very intellectual voice. I’m not sure how much grasp he’s got of it. His strengths were historically US relationships and he certainly hasn’t got those now.”

So what’s Moulton going to do after 2018?

“I’m going to try and live for a start,” he says but in the same breath he lists numerous positions he holds including chairman of the Channel Islands Stock Exchange.

“I’m 66 and entitled to take a bit of a slower view,” he says.

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