John Duffield: the fading star once dubbed 'Croesus in a Mondeo'

John Duffield is credited with creating more millionaires than any other financial entrepreneur. Now, however, his New Star Asset Management is all but bust.

"If there is a Signor Sassi, he should keep his head down," says the FT. John Duffield's favourite Knightsbridge restaurant the setting for countless feasts of oysters, lobster and ice-cream in happier times "could be the scene of some crockery throwing" if desperate attempts to save his New Star Asset Management come to nothing. Duffield is a City institution: colourful, abrasive, and renowned for his volatile temper, he is said to have created more millionaires than any other financial entrepreneur both at New Star and at his previous venture, Jupiter. His former wife, the philanthropist Dame Vivien Duffield, paid him the mixed compliment of being "a lousy husband but an excellent fund manager". The latter claim is now being tested to the limit.

When Duffield, 69, launched New Star at the London Planetarium in 2001, he roped in legendary stargazer Sir Patrick Moore to announce the birth of "a new star like no other". Attracted by the big-name managers whose pictures Duffield plastered across hoardings nationally, investors flocked to his funds. And New Star's money men delivered, enabling Duffield, with typical hubris, to slam the performance of rivals as "a disgrace".

When the business floated in 2005 (famously making even its secretaries millionaires), Duffield pocketed £150m. But the slide in performance was already underway, says The Independent; and with investors exiting in droves, New Star's once-buoyant shares hit the skids. News of a debt-for-equity swap with lenders this week, and the ill-advised attempt to strong-arm the Financial Services Authority into suspending its shares, caused a meteoric slide in 'Death Star' shares.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up

Duffield is a burly man who is feared by many, and his antagonists in the City could be forgiven for a touch of schadenfreude. So, indeed, could the Germans. Executives at Commerzbank to whom he sold his first business, Jupiter, in 1995 are still smarting at his description of them as "Nazis". They were "very sensitive", he later told the Evening Standard, although "I said it with a smile on my face".

But much as he likes to shock, Duffield has always been out to prove himself. Educated at Harrow, he took a degree in biochemistry at Oxford, where he met Vivien, daughter of Charles Clore, the Sears retail tycoon. "I think her father thought I married her for money," he says. "Actually, I loved her." But a driving factor behind founding Jupiter after their bitter divorce was the desire to prove his own money-making powers. "Money is how you keep the score." He has remained a bachelor ever since: living the good life on his two farms in Oxfordshire and Berkshire and usually beginning his working day at around 11.00am a late start for the City. While he demands strict dress standards from his people, he cultivates an unflashy image, says The Guardian: he is "Croesus in a Mondeo and an M&S pully".

Duffield is said to be "deeply sad" about New Star's troubles. But we shouldn't feel too sorry for him, says The Independent. He is, after all, a multi-millionaire. And, on past form, it won't be long before he's back, says The Mail on Sunday. Whatever else one might say about him, he is "one of life's optimists".

Intolerant of failure, but a sucker for fashionable guff

John Duffield "takes no prisoners", says Chris Blackhurst in the Evening Standard. A perfectionist, intolerant of failure, he ran a "harsh and sometimes brutal regime".

Duffield's genius lay not in investment per se, but in having an eye for talent. Never a "feted stockpicker", notes The Times, he established himself as "a manager of managers". Latterly, however, he stands accused of not being ruthless enough. Having poached big names, such as Stephen Whittaker, he was slow to act on poor performance. Whittaker's UK Growth Fund has been languishing for years, says The Daily Telegraph, yet he was only let go last month.

One reason could be Duffield's inherent bullishness. "In everyone's life there are five or six moments that represent real buying opportunities. Now is such a time," he told the Mail on Sunday in March, when New Star was already suffering heavy outflows. He was similarly upbeat about property boasting that New Star, unlike rivals, had never contemplated shutting the door on investors wanting to exit its property fund. They're locked in now.

But Duffield's biggest mistake, says the FT, was falling for the fashionable guff that the balance sheet would be made "more efficient" if he leveraged the company and returned cash to shareholders. Sure, it pleased his fund manager "stars" for them, financial reward was the quid pro quo for having a difficult boss. But the worry now is that many will simply walk away. Duffield is "about to discover whether money really can buy you love".