Sovereign cashes out first fund

Having sold its last investment, Sovereign Capital LP I returns over for times investor’s money after eleven years.

Sovereign Capital Limited, the UK private equity manager, has sold the last investment made by its first fund, Sovereign Capital LP I.

The investment, Craegmoor Healthcare, was sold for a total consideration of just over £1m – or four times book value – including a recent dividend of £124,000.

With the Craegmoor deal completed, Sovereign has now fully cashed in on the first fund, returning 4.1 times the original £36m invested – £45m had originally been committed – over an 11-year period. The fund generated £147m in total, equating to an Internal Rate of Return of 33 per cent gross, 24 per cent net.

John Nash, Sovereign’s chairman, said the fund had been a great success. “Containing underperformers as well as reinvesting multiple rounds of finance in top performers has been a sound strategy for success.”

Sovereign, which currently has £175m under management, specialises in UK equity investments of between £2m and £10m. Preferred industry sectors are healthcare, leisure, support services and technology services.

The firm is currently in the process of raising its third fund. 'Our target for the new fund is £100m, but we are expecting to exceed this', said Peter Brooks, Sovereign's managing director, in an interview. Following a first closing at £55m in May this year, a second closing is now imminent. The deadline for the final closing of the fund is February.