My first interview is with a man well known to followers of UK private equity: Jon Moulton. Often controversial, he is in many ways the conscience of the industry, willing to take a public stand in criticising his peers when he thinks they are going astray. In the boom prior to 2008, he was one of the few practitioners openly to criticise the levels of debt others were taking on, telling Maggie Lee of
Over the last six years it’s been easy to raise debt. This flood of fresh capital into the market has enabled buyers to pay more for companies. While you can make a lot of money in the buyout market just by watching the debt multiple ascend, there’ll come a point when portfolio companies will find it tough to repay the interest on their loans; and at that point we’ll see liquidations and distressed companies.
Always one to translate opportunity into action, Moulton positioned his then firm, Alchemy, to make money from this distressed debt, launching a £300 million fund for the purpose. Unfortunately his partners wanted to pursue other strategies, so he quit and founded Better Capital, a London-based, publicly quoted turnaround private equity (PE) firm. At the time of writing it is one of the very few listed PE vehicles to trade at a premium to net asset value — a sign, perhaps, of the market’s confidence in Moulton.