When the Alchemy went wrong, it was Better to split up

DIVORCES mean a lot to Jon Moulton. A happily married man of 25 years, he has never been through one himself. Yet they have played a central role in his fêted rise from Lancaster University chemistry student to Britain's best-known venture capitalist over the past four decades.

Every investor has their own quirks when it comes to choosing which companies to back. Unusually, Moulton pays careful attention to the marital history of those at the top of the firm.

Although several divorces are distasteful in his view, one is "better than none" as it gives company directors with expensive divorce settlements an incentive to replenish their depleted pockets.

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It was also the divorce from Alchemy Partners, the private equity firm he set up in 1997, that has propelled Moulton on to his latest success.

Just six weeks after one of the messiest walkouts the City has ever seen, Moulton set up a new investment vehicle, Better Capital, which last week made a promising debut on AIM, raising an impressive 142 million at a time when funds are still over-cautious about who they entrust their money to.

The City was watching the flotation carefully after Moulton's nuclear departure from Alchemy in September – it is accustomed to drama, but every now and again the thespians of the Square Mile are treated to an epic.

Disagreements over strategy with Alchemy's new boss, Dominic Slade, had been bubbling beneath the surface for months but at the beginning of September, the fury erupted. Moulton, who is known for his sarcasm and sharp tongue, penned a letter to investors, explaining why he was retiring from Alchemy a year earlier than expected.

True to form, Moulton did not mince his words. He made his feelings towards Slade quite clear when he told investors he would be "unable" to endorse him as managing partner, adding poignantly: "Together with my partners past and present, I made too many investment and people errors."

The letter sent the City grapevine into overdrive, with loyal Moulton supporters questioning who would back Alchemy in future after Moulton's scorched earth departure. But others jumped to the defence of Slade, who had been plucked from Harvard Business School by Moulton himself just a year after Alchemy was founded.

It wasn't the first time Moulton has left a firm under ambiguous circumstances – rumours of a fall-out also surrounded his departure from Schroder Ventures, now Permira.

However, although he can sometimes rub people up the wrong way with his plain-speaking and air of self-assurance, Moulton found he had plenty of friends left in the City last week, when funds queued up to back his latest venture.

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Better Capital – whose name is a slap in the face to Alchemy as it was christened after a line in Moulton's resignation letter, "I would do it again, but better" – raised 142.4 million ahead of its flotation on Thursday.

Moulton even claimed that he would have raised more, had it not been for the uncertainty over Dubai.

"If Dubai had not happened we would have hit our upper limit easily," he told one newspaper.

Ruffer, the London-based money manager which has ties to hedge fund tycoon Crispin Odey, has taken a 29.5 per cent stake. BlackRock snapped up 9.8 per cent, as did Scottish Widows, and Aviva has taken 7 per cent of the new venture.

Moulton has personally ploughed 15m into Better Capital, giving him a 10.5 per cent holding. He will run the private equity vehicle linked to the fund, which will specialise in his favourite type of investment: distressed firms.

Moulton says he has already looked at more than 50 deals – most of which are small and medium-sized firms. His intention is to invest no more than 28m in any single deal.

It's little wonder the City has been so eager to sign up for Better Capital. Although Moulton admits he, like everyone else, has shouldered losses during the recession, his investment record reads like a fund manager's fantasy.

One of his most famous deals was his decision to back a 70m management buyout of Parker Pens in 1986, while he was still working for Schroder Ventures. Seven years later the firm, known for its tasteful fountain pens, was sold for a staggering 312m, representing a return of 72 per cent.

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Moulton has built up such a fan base over the years that he has even been celebrated for the deals he hasn't pulled off – including his failed bid for the car manufacturer Rover in 2000. He lost out to Phoenix Partners – but in the years that followed, he was approached by many Rover workers who told him they wished he had been their new master.

More recently, Moulton was also one of just a handful in the City who saw the end of the economic bubble coming.

In October 2006, he said: "We're looking at an overheated market. We'll see some spectacular falls in the next year or two. It's just a matter of time."

But that didn't stop him from experiencing some personal pain and he admitted last year: "I have stock market investments and they are all worth less than they were before". However, if the last Sunday Times Rich List is to be believed, Moulton still has 102m to play with. And play he does, with properties in the French Alps, Kent, London's Knightsbridge and Guernsey.

Shortly after the ballyhoo with Alchemy, Moulton celebrated his 59th birthday, but this is one City homme clbre who has no intention of retiring yet. With Better Capital tipped to make the same splash as Alchemy in its early years, if there's one thing that you can say for certain about Moulton, it's that we haven't seen the last of him yet.


A NATIVE of Stoke-on-Trent, Jon Moulton studied chemistry at the University of Lancaster before training with Coopers & Lybrand as an accountant.

He was one of the early pioneers of the venture capital movement, becoming managing director of Citicorp Venture Capital in 1980.

From here he moved to Schroder Ventures, now Permira, where he completed one of his most famous deals: he netted his investors more than 500m in seven years by backing the management buy-out of Parker Pens in 1986.

A short spell at Apax ensued before he set up his own private equity firm, Alchemy Partners, in 1997.

Moulton is married with two grown-up children and lists his interests as tennis and "his wife".

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