JON MOULTON, one of Britain’s wealthiest and best-known private investors, is backing a management buyout of Charcol, the mortgage broker, for less than £10 million, The Times has learnt.

Mr Moulton has teamed up with Advantage Capital, the private equity company, to buy Charcol, which is expected to fetch well under a tenth of the price that Bradford & Bingley (B&B) paid for it just four years ago.

Mr Moulton, who is investing from his own pocket rather than through Alchemy Partners, the venture capital firm he founded, is backing a management buyout team led by Ian Darby, group commercial director of Charcol, and John Garfield, the founder of the company.

Advantage Capital targets struggling companies and is best known for its acquisition of Bennetts, the motorcycle insurance broker, which it sold to Cox Insurance for £4.5 million in December 2003, yielding a profit of more than £1 million in 11 months.

The sale price will be a severe blow to B&B, which bought the business for £102.5 million in 2000.

Although Charcol has been in decline for some time, B&B hoped to raise at least £70 million for the business, which made pre-tax profits of about £170,000 in 2003.

The mortgage broker was forecast to make just £70,000 this year, but sources close to the business say that even this figure will be far too high.

Charcol has suffered in recent years as it expanded too quickly in an increasingly competitive industry.

The sale of Charcol is the last of several disposals in recent months. B&B has sought to return to its main mortgage lending business after several years of diversification.

The management buyout comes after the sale of B&B’s estate agency chain and surveying business to Countrywide last month for £44.4 million.

Mr Darby joined John Charcol, as the company was known, in 1984. He resigned from the board in August, but remained as group commercial director, prompting speculation that he could be preparing a management buyout.

Mr Garfield co-founded John Charcol in 1973 and retired in 1998 when he sold the company to Warburg Pincus, the US buyout firm, in a deal that made him and Mr Darby multimillionaires.

All parties declined to comment.