Sovereign Capital closes fund on £275m

The UK lower mid-market private equity firm has capped its second fund just seven months after launch and well ahead of an initial £200m target.

Sovereign Capital, the London-based lower mid-market private equity house, has closed Sovereign Capital Limited Partnership II (SCLP II) on £275 million (€402 million; $515 million). The fund was hard-capped at that level seven months after launching with a target of £200 million in September 2004.

The fund saw re-ups from investors in the US and Asia which had backed the firm’s first fund – which closed on £120 million in April 2002 – as well as commitments from new European investors including Access Capital Partners, Danske Private Equity, Nordea Investment Management, Robeco Private Equity and Wilshire Associates Europe.

Acanthus Advisers acted as placement agent for Sovereign Capital in Europe, while Macfarlanes was hired as legal adviser.

SCLP II will invest £5 million to £20 million of equity in UK companies facing succession issues and which will be developed through a combination of organic growth and buy-and-build and rollout strategies. Sovereign says it typically holds its investments for longer than the industry average.

Sovereign’s 14-strong executive team is headed by Peter Brooks (managing partner), Andrew Hayden (senior partner), Ryan Robson (senior partner) and Michael Needley (finance partner).

“Investors recognised that our strategy differentiates us, is successful, and will be strictly adhered to,” said Brooks. “We only invest in companies that meet specific criteria and apply the Sovereign Capital growth strategy to every deal.”

In a statement, Sovereign said its debut fund, SCLP I, is 79 percent invested and committed and had returned 40 percent of money invested by April 2005 (the average age of the portfolio is 17 months). The firm now has a total of £450 million of funds under management.

Recent deals completed by Sovereign include the £26 million buyout of TRACS, a group of specialist residential care homes for adults with mental health needs; and the acquisition of Cliff and Silverwood Schools, a group of independent pre-preparatory schools, for an undisclosed sum.

Originally known as Nash, Sells & Partners, the business changed its name to Sovereign Capital in late 2000 upon the retirement of founder Andrew Sells.