Sovereign Capital has exceeded the GBP100 million target it set for its third fund, Sovereign Capital Limited Partnership III announcing a final close at GBP120 million. This is almost 2.5 times the size of the last fund.
The fund was launched in October 2000 to focus on the UK lower mid-market in specific sectors including outsourcing, support services, facilities management, waste/environmental, education/training, healthcare services and leisure.
The fund has attracted commitments from around 20 international pension funds, insurance companies and endowment funds. Managing director, Peter Brooks, said: “In what is arguably a me too’ private equity provider market, we were able to communicate our highly individual approach to investors. The fund raising has been a great success story and we welcome the large number of new institutions committed to the fund in addition to the continued support from existing ones.”
He added that the mid-market offers increasing opportunities and coupled with current low multiples, there are attractive deals to be done. The fund has already completed its first investment with the GBP20 million MBO of UK healthcare services company, Community Homes of Intensive Care and Education Limited. The transaction is a typical Sovereign buy and build including initial funds to support the MBO and additional development capital to fund organic growth and acquisitions.
There are a further five deals in the pipeline, two of which are expected to close by the end of May, deploying up to 22 per cent of the fund through initial investment and/or follow-on commitments.
Sovereign Capital, formerly Nash, Sells and Partners was founded in 1988 and is an independent UK private equity fund manager focusing on investments in mid-market UK companies. Investments are in the range of GBP2 million and GBP15 million.
Other transactions this year include an GBP8 million commitment in Promanex Group to support its first major acquisition and facilitate further expansion for the industrial support services company. Sovereign led and structured the original MBO of the group in December 1999. In February, the firm committed a fifth round of financing to Mortal Man Inns to finance an acquisition in MMI’s buy & build strategy in the country pub sector bringing Sovereign’s total commitment to GBP5 million.