Jon Moulton attacked the private equity industry’s own lobby group yesterday for using “dodgy statistics” in an effort to improve the sector’s battered image.

The founder and managing partner of Alchemy Partners said that he was “horrified” at recent data published by the British Venture Capital Association (BVCA), which tried to show that employment in businesses backed by private equity had risen 8 per cent over the five years to 2007.

In a speech to his peers on the first day of the industry’s annual Super-Return International conference in Germany, Mr Moulton said that the data was misleading because it reflected only a sample and did not take into account private equity-backed companies that go bust. Nor had the numbers been adjusted on an annualised basis.

“I am relatively horrified to see that we’re using very dodgy statistics,” Mr Moulton said. “If you use an adjusted figure, the number should be more like zero. We’re putting these things out as fact and we shouldn’t.”

Mr Moulton also took a general swipe at the BVCA for not holding elections to vote in its senior management and he called the overall quality of is staff “variable”.

Simon Walker, the chief executive of the BVCA, said that IE Consulting, the firm that carried out the research into the benefits of private equity, including employment, on the organisation’s behalf, stood by its findings. “The BVCA supports the view that private equity needs more research and we are working to strengthen independent analysis of all aspects of the industry,” Mr Walker said. “I’d welcome Jon Moulton’s participation in that process.”

Mr Walker, the former press secretary to the Queen and most recently head of global communications for Reuters, the news agency, said that all the research that had been published so far by independent companies commissioned by the BVCA “seems to confirm the basic picture that private equity and venture capital tend to out-perform public companies across a range of indicators”.

Mr Moulton said that private equity executives were still viewed by politicians and trade unions as “rich capitalist swines” and he said that tougher regulation was starting to bear down on the industry, despite there being no real evidence of any wrongdoing. “We’ve got plenty of enemies,” he said. “Envy makes us a great target.”

Mr Moulton gave warning that the spotlight would fall back on the industry quickly once private equity-owned companies started to fail, which he said was inevitable.

“There are some savagely leveraged companies out there,” he said. “There’s no getting away from the uncomfortable truth that extreme debt is dangerous . . . companies will go bust. Companies will get into trouble.”

Private equity spin exposed

The BVCA report of February 13 claimed:

— Businesses backed by private equity have been creating jobs at a much faster rate than other private-sector companies

— In the five years to April 2007 UK private equity-backed companies increased staff by an average of 8% a year, compared with 0.4% for FTSE 100 companies

"This report is an antidote to some of the myths about private equity"

— Simon Walker, BVCA chief executive

Moulton's analysis:

— The report did not take into account any private equity-backed companies that went out of business

— If these were included the 8% job creation claim would have been about zero

"I am relatively horrified to see we’re using very dodgy statistics"

— John Moulton, founder of Alchemy Partners

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