Sovereign makes 51% IRR on Complete

Sovereign Capital, a UK buy-and-build specialist, has built upon an extraordinarily active few months with the sale of specialist homecare services provider Complete Group.

Claimar Care Group bought Complete Group for £33m (€47.4m). Equita Corporate Finance and DLA advised on the transaction.

Telford-based Complete Group provides bespoke care packages to adults and children with severe long-term illnesses or disabilities, such as spinal injury recovery, with a focus on promoting independent, supported living in the client’s home.

Under Sovereign’s ownership, Complete has more than doubled the number of clients it cares for (currently more than 200) and provided year-on-year revenue growth of 27% per annum over the last three years. Earlier this year, Sovereign completed the bolt-on acquisition of Paediatric Nursing Link, improving the group’s reach into the London area. The business has Ebitda of more than £3m on turnover of £22m.

For Sovereign, the exit represents an IRR of 51% and a 5.7x return on its original £5.7m management buyout in 2002. Complete is the third sale from Sovereign Capital’s debut fund, SCLP 1, which closed on £120m in April 2002, with a further nine investments still to be realised. The fund’s track record includes cash returns of more than 1.8 times with an IRR of 53%.

Sovereign also recently exited CVS Group through a £105.7m flotation on AIM, but it is in its buy-and-build investments that it has led the field in the private equity mid-market of late. In the past month, Sovereign has created Employability and Skills Group from three prior investments (see opposite), and acquired; Dependable Services for LPM; Walmotts for Kinetics; and Positive Lifestyles for Alkare.

Andrew Hayden, managing partner at Sovereign Capital, said that recent activity showed that the firm “has not been slacking” but pointed out that the stacking up of deals in the last two to three months was largely a coincidence.

“The reality is that many of these deals start many months, even years, before,” he says. “It’s just that, like buses, several tend to come along at once. Our buy-and-build strategy means off-market, auctionless transactions, so we need to start a dialogue with these firms, which can often take two years.”

Hayden confirmed that there would be more bolt-on acquisitions before the end of the year, particularly in the education and training space and in various sub-sectors of support services.