Moulton: 'We’ve got some years before the end'

After a difficult few years, the private equity veteran’s turnaround firm has decided not to raise a successor to BECAP12, but it is not shutting up shop just yet.

Private equity veteran Jon Moulton’s turnaround firm Better Capital will not raise a successor to its 2012 fund, but the firm is not closing its doors.

Responding to reports that the firm was “winding down”, Moulton said he was “startled” by the news, noting that he thought it was “pretty well common knowledge 18 months ago” that the firm had decided not to raise a successor fund.

“We’re right-sizing for the remaining portfolio,” Moulton told Private Equity International today, commenting on recent departures from the firm.

“We have got quite a lot of work left to do, we’ve some years before things hit the end of that. A few years is quite a long time, during that anything could happen. Some new venture might conceivably be launched. But that will happen with time or not.”

Better is made up of two “liability-remote cells” which are separately listed on the London Stock Exchange. BECAP, the first cell, has net proceeds of £204 million ($290 million; €257 million) and an investment period running from 21 December 2009 to 31 December 2012. BECAP12, the second cell, has net proceeds of £348 million and an investment period running to 30 June 2016. The cells function as closed-ended private equity funds, with a fee and carry structure, and distribute proceeds to investors as assets are sold, meaning they gradually reduce in size.

Since the end of 2014, the firm has seen a string of departures, including co-founder Mark Aldridge, who resigned, reportedly amicably, last year. On 31 March director Tom Wright, who was acquitted over the collapse of Better Capital portfolio company City Link, the parcel delivery firm which went into administration on Christmas Eve 2014, also resigned.

In an exclusive interview with PEI last year, Moulton said it was imperative for the firm to “generate some more record on exit” before attempting to raise any further capital.

Last year Moulton told PEI that turnaround firms were suffering from a radical depletion in the number of target companies. Moulton said he was expecting a flood of deals post-crisis as businesses failed to recover from the market crash, but due to low interest rates that never materialised.

“What you've got is a situation where the very low interest rates [and] on the whole remarkably compliant banks mean that companies aren't getting into trouble in the way that they used to,” he says. “And perhaps they should. Because, of course, with no effect of pressures like that, weak business models stay in the corporate pool rather than being sifted out by bankruptcy.”