How friends profited from Poutney

DAVID Poutney could hardly believe his ears. He was listening to a university presentation about a device invented by academics that was the size of a handbag and could power skyscrapers. Eureka, he breathed. Poutney vowed to invest in Turbo Genset, the company marketing the invention, and urged friends to follow suit.

They did not need telling twice because Poutney, then an equity salesman at Panmure Gordon, was fast establishing himself as a successful share promoter and City friends were already reaping substantial benefits. So they invested their cash in the subsequent private placing.

Poutney, nicknamed The Pud, now works at stockbroker Numis, where he is the third largest shareholder.

He also encouraged City financiers to invest in West175, a television company that produced Masterchef and The Galloping Gourmet; Monotub, which fans predicted would become the washing machine equivalent of Dyson; and biotech companies KS Biomedix and Genemedix.

But it is only today, seven years after that presentation at London's Imperial College, that the full story behind Poutney's remarkable success can finally be told.

After the flotation of Turbo Genset in July 2000 - in those heady days of the dotcom boom that saw the company's valuation balloon to £1bn - its shares shot up from £13 to £28 within weeks. Some investors could have made million pound profits. Last week, the shares were worth just 33 1/4p.

Poutney's stake in Turbo Genset was valued at about £6m when Panmure Gordon began to advise the company shortly after flotation. He says that his interest was disclosed immediately in 1997 and he received official permission to make the investment. He sold it to buy his stake in Numis.

Poutney has been described by his father-in-law as a 'financial genius'. His wife Vivienne and colleague Lorna Tilbian both invested in Genemedix.

Early allotment documents for the biotech company reveal brokers Carl Gough, Rodney Maryan Green, Anthony Larkin and Julian Burn-Callendar, who have all worked with Poutney over his long career, and fund managers Mark Horrocks and Stuart Fowler as early investors. Poutney was also a founding investor in Genemedix.

A former colleague at Panmure Gordon said: 'David does talk and does not always get it right. But a lot of people made money from his tips. He would come across interesting companies that Panmure would not view as suitable clients to act for, and ring his mates to promote them. But all his dealings while at Panmure were disclosed to the compliance department.'

In March 2002, the Financial Mail on Sunday revealed that as many as 15 fund managers took personal stakes in Turbo Genset, where they later invested cash from the funds they oversaw. The practice is called 'front running', and while the Financial Services Authority does not impose a ban on fund managers buying shares, then putting their clients' money in, the practice is frowned on by many City institutions.

Numis, chaired by Michael Spencer, said Poutney had no idea how many fund managers invested on a personal basis in Turbo Genset, and that he was not aware of front running in the stock. There is no suggestion Poutney did anything unlawful in his share promotions. Richard Buxton, fund manager at Schroders, said: 'Stockbrokers are allowed to promote companies they do not act for.'

Fund managers at, among other companies, Dresdner RCM, Barings and Jupiter, confirmed to Financial Mail that they had taken personal stakes in Turbo Genset and later invested institutional funds.

Mark Horrocks, fund manager at Intrinsic Value, admitted making personal investments in Turbo Genset and Genemedix but denied placing institutional funds. Colin McLean, fund manager at Scottish Value, said: 'The shares were pushed quite hard by David Poutney. We had investments in Monotub and Turbo Genset, which we sold out a long time ago and quite profitably. My personal investments are only in our funds.'

Stuart Fowler, head of UK investments at Axa, bought shares in Turbo Genset when it was listed in Canada, but has since lost the certificate and failed to sell them. He also once held a small investment in Genemedix. 'I am 99.9% certain that I didn't invest my funds in either stock,' he said.

One City banker who followed Poutney's advice said: 'We were attracted by the fact that Nigel Wray, who is viewed as one of the City's richest and cleverest contacts, was investing. John Gunn was also an attraction.'

Property developer Wray was once a major investor in Genemedix, while Gunn is a non-executive director of both Turbo Genset and West175, though shares in the former media darling have been suspended.

A Numis spokesman said: 'David has acted for companies where Nigel Wray is on the board since the mid-Eighties when he was at BZW.'

Poutney's former colleagues at Panmure Gordon say his promotional activities eventually became his main interest. 'He left Panmure because he wanted to carry on doing his own thing,' one explained. 'He felt uncomfortable here. I think he feels more comfortable at Numis.'