Sovereign books 4x on compliance business

The UK-based firm will be selling compliance consultancy Cordium for around £100m

Sovereign Capital, a UK private equity buy & build specialist, has agreed to sell Cordium, a global compliance and regulatory services provider, to debt investor European Capital, according to a statement.

Financial details of the transaction were not disclosed, but the deal value is approximately £100 million, according to a source familiar with the matter. Sovereign declined to comment on the deal terms.

The sale, which is awaiting approval of the Financial Conduct Authority and the Malta Financial Services Authority, will deliver a return in excess of 4x, according to the statement.

Sovereign originally bought Cordium, formerly The IMS Group, in November 2010. Through Sovereign’s strategy of buy & build, Cordium made eight add-on acquisitions which included HedgeOp in New York, HedgeStart in London and Zodiac Advisory Services in Malta. The group also opened offices in Hong Kong.

Throughout the four years of Sovereign’s’ investment, Cordium achieved strong organic growth and became well known for its innovative web-based software solutions that allow clients to process their compliance obligations efficiently and securely. The group also broadened its service offering to include accounting and tax.

“With the avalanche of financial regulation and the requirement for investor governance transparency, the demand for outsourced independent compliance services has continued to accelerate globally”, Neil Cox, a director at Sovereign Capital said.

The investment was originally made from Sovereign Capital’s Fund III, a £300 million 2010-vintage. In September, Sovereign used that vehicle to invest in Willows Veterinary Centre and Referral Service, a specialist veterinary centre for pets. That was understood to be one of the last deals from that fund, PEI reported at the time.

In August, Sovereign closed its fourth fund on its £395 million (€497 million, $655 million) hard-cap having spent just four months in market.

SCLP IV will invest up to £50 million of equity in services based companies. Sovereign typically targets investments in the business support services, healthcare and education & training sectors. The firm develops companies through a combination of organic and buy-and-build growth strategies.

Earlier this year Sovereign fully realised its first fund, SCLP I, a £120m fund with a 2001 vintage, which generated an overall return of 3.5x.