Sovereign has exited from specialist education provider SENAD in a £130m (US$240m) deal with an unnamed corporate buyer.
According to the mid-market private equity firm this represents a return of 6x money and an IIR of 110%. It is the first exit from the £120m Sovereign Capital Limited Partnership 1 Fund (SCLP 1) which closed in May 2002. SCLP 1 has a further 14 investments pursuing buy-and-build strategies.
SENAD is a typical investment for Sovereign which has a special focus on health and social care. It acquired the business in 2003 through a £22m buyout of Honormead Schools and the subsequent £9.5m acquisition of Principal Care Services.
Since then the group has grown organically and through three further acquisitions, Tregynon Hall, Aran Hall and Orchard School. It now has 400 places for children and young adults across seven schools.
Ryan Robson, partner, Sovereign Capital, says: “The specialist education sector is a very fragmented sector. It is dominated by the State but a number of teachers have come out of the state system and set up their own units which have grown and may become interesting targets for us”.
Robson argues that businesses like Senad will become potential targets for the larger conglomerate type models like Barchester which are growing out and diversifying their offerings.
“These are profitable assets backed businesses with longer term revenue than those offered by the elderly healthcare sector so they are interesting targets”, he says.