THE ANDREW DAVIDSON INTERVIEW: Magazine Journalist of the Year - Jon Moulton. The man in charge of Alchemy, underbidder for Rover, is quick-thinking and impulsive, and his urge to dig for gold in unpromising situations comes with a wolfish sense of humour

THE ANDREW DAVIDSON INTERVIEW: Magazine Journalist of the Year - Jon Moulton. The man in charge of Alchemy, underbidder for Rover, is quick-thinking and impulsive, and his urge to dig for gold in unpromising situations comes with a wolfish sense of humour

by ANDREW DAVIDSON
Last Updated: 31 Aug 2010

Jon Moulton, boss of Alchemy, is just off the phone when I walk in. Bald, thin, ascetic-looking, he makes a welcoming gesture to his cubicle-like office. It's not more than 10 feet square, the walls dotted with framed photos of staff gatherings. Despite Moulton's status as one of the country's best-known venture capitalists, there is little glitz, no front - the cubicle is just one of many on the third floor of a modest building in London's Covent Garden. The only clue as to the firm's business is an in-joke alumni board, gold lettering on wood, hanging in reception.

It lists the companies that Alchemy backs, and looks like the winners' board in a village tennis club.

That's Moulton's style. He keeps Alchemy small, treats those around him as family and, despite acclaimed success, resolutely refuses to grow the outfit beyond eight or so partners. He doesn't want the operation to get so big that he can't be involved in the deals. What's the point, he asks, that's what he's good at.

It's an argument he has made repeatedly throughout a stormy but lucrative City career. Citibank, Schroders, Apax - you name them, he's left them (usually after making them and himself big sums along the way). Last year he popped into the headlines as 'the man who nearly bought Rover' before a frightened government shooed him away. Moulton's VC niche is 'difficult deals' - he loves backing management to turn round poorly performing companies.

He is also quite happy to see plant closed and workforces axed if he feels the situation demands it.

The morning I walk in, he's got the whiff of something new. I've been talking to a few banks, he says, waving me to a seat. They're nervous.

That's always the first sign, he adds, they're less willing to put up money, less confident in the future. He'd already given his junior staff a lecture that morning about how business changes when the indicators slide. He can feel recession in his bones.

When?

'If you extrapolate the trends, 1929 will happen in April,' he says, a gnomic smile twitching on his lips.

Is he joking? Probably, but it's tough to tell, because beneath the stern image, Moulton is a natural mocker.

Or maybe he has an agenda. Talk to others in his office and they'll tell you that a recession looks rather attractive in their line of work. They may find it tougher to raise money but, on the flip side, with their target firms they can get more equity for less, screw people down to tougher terms, see more 'difficult deals', look at bigger profits in five or seven years' time - the normal gestation period for a VC's profits.

Moulton, 50, claims he works rather faster than that, making on average three times the money put in within three years, so maybe a recession would slow his average down.

How does he generate those profits? By seeing value where others just sense trouble. The firms don't all have to be basket cases. Those he has helped in the past include Parker Pen, RJB Mining, Tetley Tea, Century Inns, Dr Solomon's and British Fuels; he currently has an interest in Wardle Storeys, Goldsmiths, Rhesus, Paramount Hotels, Four Seasons Healthcare, Petrol Express and others. A lot nowadays tend to be 'publics into privates' or outfits that others cannot handle - hence the interest in Rover last year, before it was whipped from under Alchemy's nose by John Towers' Phoenix consortium.

No hard feelings? No, shrugs Moulton, why should he? Alchemy was paid pounds 1 million a week for its troubles by BMW, and the PR effect was fantastic.

Once it had walked away from Rover, the deals rolled in. He speaks with a resigned pride, straightening his cuffs, like a jeweller who had to miss out on a flawed gem because of his own acumen. Given the worries voiced by some of Alchemy's investors that turning round Rover would have been too time-consuming, maybe it was a lucky escape.

Anyway, more on Rover later. What's he looking at this winter?

'Telcos,' he says, a wolfish grin returning. 'Distressed telecoms companies. It would have seemed lunatic six months ago, but we have hit the right target here - these boys are in terrible trouble.'

He says it almost with a smack of his lips.

Such as?

'Well, no names, but I'll give you an example: small telco, third or fourth operator in a European country, geared up to its armpits in debt, not much in the way of operating, rates lower than expected, WAP not worked as well as hoped, debt markets closed, equity markets not receptive...'

So why would he be interested?

'Because we would consider putting equity in on appalling terms, and get a large amount of ownership for not a lot of money.'

Then, typically, Moulton would be in like Flynn, cherrypicking the management, crunching the debt, laying off, shutting down, rebuilding, incentivising with huge bonuses and shifting his concentration elsewhere. It's what he's done since his early days as an accountant handling receiverships in Liverpool. That was his training ground and since then, throughout a career that has taken in London and New York, he has become very good at it.

'He's absolutely fixated by the opportunity of digging gold out of unpromising situations,' says Brandon Gough, chairman of De La Rue plc and an old Moulton associate. Another friend, Lord Shepperd, former boss of Grand Met, now chairman of Unipart, describes Moulton as an amazing lateral thinker. 'When you've thought through the eight alternatives, he will always come from the ninth direction.' In his line of work, that gives him the edge.

Moulton is not sure from whom he inherited the gift. Definitely not his father, he says, a master engraver who worked for the potteries in Stoke.

Maybe from his mum, who was good at doing the things you are supposed to do and worked for the local Conservative party (a lost cause in a staunch Labour seat). More likely, he says, he gets it from his grandfather, who ran a medium-sized engineering company - boilers, lifting equipment - and lived next door.

Although, as he tells it, his grandad's firm was actually hopelessly managed, it provided early lessons in how (not) to organise things. He worked there in his summer holidays and by the time he left school was pretty conversant with factory practices.

So it was a middle-class upbringing in Stoke, grandad had money, his parents didn't and sent him to the local state schools. He had a big brother, a lot older, who now runs Michelin's logistics division out of Paris, and his main recollections of childhood are of being ill: TB, sinus problems, then later amoebic dysentery and aplastic anaemia.

Because of this, and the fact that he was around a lot, he was 'Mother's little favourite'. He loved chemistry and was allowed to build his own laboratory in a shed in the garden. 'I'd done my A-level chemistry work by the time I was 14,' he laughs. It was, however, exposure to the chemicals in his shed that may have caused the aplastic anaemia - complete bonemarrow failure, a condition from which few recover. 'That sobered me up,' he says.

But he survived, got great A-levels and won a scholarship to Aberystwyth - 'those were the days when if you didn't go to the right school, you didn't get into Oxford and Cambridge'. He found he was the only person at Aberystwyth reading joint honours in chemistry and biochemistry and hated it. So, establishing a pattern that was to continue, he walked out.

He took a job at a building society for eight months, then transferred to Lancaster.

After university he lost interest in being a scientist (not enough money) and did the usual milk round. He was offered a job at the Bank of England - 'they were trying to get the odd red-brick lad in' - but plumped for Cooper Brothers, accountants, who had a large office in Liverpool. From there he moved to America, worked on mergers and acquisitions until he decided he had to get out of accountancy, moved to Citibank, came back to the UK, was headhunted to set up Schroder Ventures, and became Britain's starriest venture capitalist.

But that's jumping the gun. Moulton says his real education began in Liverpool, where he was put in charge of bust companies. 'It was around 1974, union-dominated environment, Liverpool was collapsing, parts of the town were already derelict, all the grandeur dying, lots of companies going to the wall.'

Moulton became the office receivership man and revelled in the responsibility.

'I am an impatient bugger at heart and I like to be able to do things. You get some of it wrong, you always will, but receivership is a nice environment. If you make a complete cobblers of it, the system is such that no-one will even raise the issue.'

He also learnt that you have to have a flinty determination and a steely heart. Moulton was always the least popular man on site, frequently threatened.

'Yeah, there were a couple of receiverships in Bootle that made Kosovo look like an easier alternative... I got bricks chucked at me, but they never managed to land one on me.'

What kind of core must that have moulded in a young manager? One that put self-reliance in front of tolerance, you guess. It was, he says, the best part of his business training, and he still keeps the mementoes, principally a large framed photo of Winston Churchill, once the property of a 'bust company' that had seen better days in world war two. The portrait dominates Moulton's little office and is probably a fair reflection of one side of his character.

Then came America and his leap out of accountancy, and his eventual return to the UK. Did he want to come back? 'No, my wife took me back. I was happy in the US, still am. I go the States about 20 times a years, get on very well there, like their blunt approach.' In fact, Alchemy has a lot of American capital backing its deals.

Does he regret coming back? 'Yes, I do,' he says. 'I would certainly have been a lot richer a lot younger. Whether that has anything to do with happiness, who knows?'

Talking to Moulton, you realise that money is his life, but his attitude to it comes with a certain blunt ambivalence. 'Jon is very simple,' says Robert Barnes, Alchemy partner and another former Coopers man. 'He just wants to make money but he wants to have fun along the way.'

It is the conflict between the two urges, and his need to do everything swiftly - quicker than most bureaucracies will tolerate - that has caused Moulton so much trouble. Back in the UK, he began what looks almost like a double life: pulling in handsome profits for his bosses on the one hand, falling out with them on the other. His stint heading Schroder Ventures cemented that reputation. By any account, the company was phenomenally successful - according to some, the fund made an average rate of return of 75% over seven years. Then things got complicated, as Moulton found that his control rubbed up badly against Schroders' top brass. Moulton, in his own words, 'trousered a very substantial amount of money' and moved on.

He did six months for Amity Capital - 'at least it was a friendly name' - and then three years at Apax before deciding to go it alone. 'Frankly, I was fed up with the size of the organisations I had worked for, where you get sucked into activities you don't enjoy and that you're not good at. I had the idea of the kind of company I wanted to run; I am not given to slow, careful thought. I just sat down on Saturday and knocked out a business plan and that's all we ever had.'

His aim was to raise about pounds 100 million a year from a small group of investors - typically, banks, pension funds, big companies, and high-rolling private investors. And he's never looked back.

But all those job moves... Does he think he is a difficult man? 'I am not aware of it. I may have been in the past. Other people have all kinds of views and I have certainly fired many people, but remarkably we have three portfolio companies brought in here by people I have fired, so we must be doing something right.'

He is hopelessly undiplomatic, though. Ask him and he will give you, in mock-Leonard Rossiter flat vowels, a very funny and libellous description of the drunks and dimwits he's worked with along the way. And the household-name entrepreneur who he reckons may shortly do a Maxwell. And the politicians who are cretins.

Moulton doesn't care who he offends - 'not a man who finds it easy to be polite', says one chief executive who reported to him. His friends say the bluntness comes with the speed of thought, and he plays up to it. 'We have had some big rows,' says Shepperd, 'and any CEO who works with Jon had better realise he is not in for an easy time, but I think he likes playing the difficult person.'

It was partly this that frightened the Government last year when he emerged, for at least a week or two, as Rover's potential saviour. Nearly one year on, Moulton is sanguine about the affair. His chief memory seems to be of how shambolic it all was. 'Half of BMW's board left on the day it was announced, we had no idea what the deal was going to be, we started with ludicrous heads of terms, bits of the wrong geography, bits of the wrong company - it was absolute chaos.'

He had 'roomfuls of people' waiting around for 'fragments of data', and on the last day found there was nearly a billion-pound difference between what he was expecting and what BMW was offering, because the Germans had stripped assets and cash out of the deal (not deliberate, he adds, 'they just don't count cash very well').

And then there was the Government, in the form of DTI secretary Stephen Byers, seeming to push Towers' rival bid rather hard. Tough to swallow?

'I think Byers wanted to give it to Towers... I am not sure why. Towers had done a moderate job at Rover before, some say bad, some say OK, and a poor job at Concentric, which was in significant financial difficulties. He had been out of the trade for some time and it was quite clear from statements he made before and since that he didn't really want a full-time job!'

And don't even ask what Moulton thinks about the chairman of BMW. Why the edge? Those who know Moulton well say he is driven by challenge, more so than by money or ego, and he probably hated having to follow his better instincts and walk away from a knotty problem like Rover.

Did the affair damage his relations with the Government? He has been pretty scathing since about politicians' incompetence at preserving the UK's manufacturing base. 'No idea,' says Moulton, 'and, anyway, we have some pretty interesting political connections through our investor base.'

What can he mean by that? His little eyes twinkle, the bald head bobs.

'Not available for the record, I am afraid.'

Cabinet ministers?

'Possibly.'

Investing money with you?

'Possibly.'

I think he is having me on. What else should I ask you? I counter.

'Well, you haven't asked me about my sex life...'

Oh please. He laughs. 'Unusually for my trade, I have been married for 27 years and very happily so.'

He first met Pauline, his wife, in a Stoke youth club. They have two children, a son and a daughter, both at university. What else does he spend his money on? Despite earning millions, Moulton likes to cultivate an austere image - the train up and down to work every day, the wedding trousers he can still get into, 'good trousers too' - but you suspect that it's a bit of an act. Well, he says, I have stocks and shares, obviously, and a pied a terre in Belgravia, a little place in the Alps, the 'modest' house in Kent. Modest?

'Well, it's about half the size of Guy Hands' staff house,' he giggles.

Ah, yes. Moulton lives bang opposite that other City maverick Guy Hands, boss of Nomura Principal Finance, in the same road in Sevenoaks. It was Hands, of course, who nearly bought the Dome from the Government last year. Rover, Dome. What conversations must these two have polishing their cars on a Sunday morning?

Talking of which, I've heard that Moulton owns, as well as the Mini that he told journalists about last year (now up on blocks because he can't get a good second-hand price for it - very symbolic), a rather nice grey Porsche. Now that's pretty racy...

He looks momentarily sheepish. 'My son persuaded me to buy it. I never drive it. In fact, the battery's always flat.'

Who does that remind me of? Oh yes, Hands. He told me he has a Maserati he never drives. Is there a competitive edge between the two of them?

No, he says, they're friends. He likes Hands a lot, though he finds him 'a bit moody'. (That, some would say, is rich.) I tell him that what intrigued me about Hands was finding out from others just how generous he is at distributing money to those less fortunate - something he doesn't tell people about.

Moulton can't resist. 'My biggest single expenditure by far is good works too,' he says. 'In fact, Hands and I are jointly funding something at the moment.'

Then he looks uneasy, realising he has probably spoken out of turn. Do they ever do business together? Not often, he says, they rarely see the same deals.

Otherwise, his life is work, lots of networking, keeping in-vestors happy and keeping up to date with what's happening in myriad different sectors.

He gives speeches, dines out a lot, does all that flying to America. And to relax? Tennis, he says, though a recent operation on his right wrist has mucked up his game.

Otherwise, he likes chess and a bit of internet bridge, cinema on Saturdays, and a lot of non-fiction books. He is a speed reader, he says, able to devour at least two titles on one transatlantic flight...

Just then the smell of baked potatoes interrupts our talk. My time is up. Alchemy's chef is laying out the food for lunch in the communal space outside Moulton's office. Anyone around helps themselves; it's how Moulton wants the office to bond together - informal, collegiate. For his 50th birthday, he took everyone down to Dartmoor - they hadn't a clue what was happening - for a muddy day out doing the Royal Tournament gun race.

It was tough but fun, he says. 'Only one partner got injured, 700lb guns are heavy,' he chortles.

And that's his end-line, gruff determination rubbing shoulders with mocking wit, as ever. No wonder his CEOs say it's daunting to have to face it month after month, always wanting everything done faster. He walks me out. In the reception he taps the board listing Alchemy-backed companies and gives me a parting shot. 'I'm going to have another one built next year,' he waves. 'It'll say: 'Gone But Fondly Remembered'.' He is laughing when I step into the lift. I am still pondering whether this is a recession joke or not.

MOULTON IN A MINUTE

1950 Born Stoke on Trent on 15 October. Educated Hanley High School and Lancaster University

1972 Manager, Cooper Brothers, Liverpool

1978 Manager, M&A group, Coopers & Lybrand, New York

1980 Executive, Citicorp Venture Capital, New York

1981 Managing director, Citicorp Venture Capital, London

1985 Managing partner, Schroder Ventures, London

1994 Director in charge of LBOs, Apax Partners, London

1997 Managing partner, Alchemy.

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