Moulton resigns from Alchemy

The UK mid-market firm’s remaining co-founder has left following strategy differences with buyout chief Dominic Slade and has called for winding down of its main fund.

Jon Moulton, the outspoken founder of Alchemy Partners, has resigned from the firm due to differences over the firm's strategy with Alchemy’s buyout head, Dominic Slade.

Reached at home, Moulton declined to comment and referred PEO to Slade. Alchemy, in turn, is referring calls to a spokesman who did not immediately return a request for comment.

Alchemy is not what it was.

Jon Moulton

In a letter to investors which was first posted on UK-focused news site Real Deals, Moulton tells LPs that “Alchemy is not what it was” and notes he disagrees with Slade wanting to change the firm's strategy to focus purely on financial services deals.

“I do not support this strategy. It's contrary to the positioning we have created with investors and deal sources and wastes a spectacular opportunity in our area of perceived greatest strength [distressed investments and turnarounds]. It likely adversely affects the partnership economically.”

Slade joined the firm in 1998 from UBS, was made partner in 2000 and elevated to managing partner of the firm’s private equity business in 2007. He has led financial services deals for Alchemy and helped establish its special situations and Indian growth capital funds, according to the firm’s website.

Jon Moulton

Moulton had previously been at Apax Partners, which he left after a falling out with the firm’s co-founder, Ronald Cohen. Before Apax, Moulton had also been the head of Schroder Ventures, now Permira, from 1985 to 1994. He began his career in private equity with Citicorp Venture Capital, which later became CVC Capital Partners.

Moulton's letter also questioned the abilities of Alchemy's remaining leadership and called for dissolution of the firm's “Investment Plan”, which has been the main source of capital for its dealmaking since 1997. Instead of a traditional private equity fund, LPs typically commit the same amount each year unless they've given 12 months notice that they wish to withdraw from the Plan. “The Plan's economics are no longer favourable,” Moulton wrote.

It is unclear whether the surprise resignation will trigger any key-man clauses for the firm’s traditionally structured private equity funds. It most recently closed a £300 million distressed investment fund in 2007, and had been considering raising up to £1 billion for a similar fund this year. Those plans were reportedly pulled in Spring.

Key-man issues are presently being discussed with the limited partners of PAI Partners, the French buyout firm which recently saw its senior management suddenly shift.

Moulton founded Alchemy in 1997 along with Martin Bolland and Eric Walters. Bolland left the firm in 2007, while Walters left in 2000.