Sovereign learns from exit

The UK firm has bolstered the performance of its first fund with the sale of a portfolio of schools to a property investor netting more than five times its investment.

Sovereign Capital, a UK buy and build specialist, has sold Alpha Plus, a UK group of independent schools, colleges and nurseries to Delancey, a property investment adviser, for an undisclosed sum.

The exit returned a multiple of 5.5 times the investment and represented an IRR of 53 percent.

Alpha Plus was acquired by Sovereign in 2002 in a £26 million buyout.  At the time of the acquisition, the group had 11 schools.  Under Sovereign’s ownership, it has become one of the largest groups of independent schools in the UK, seeing a 44 percent increase in pupil numbers to about 2,800 through both organic and acquisitive growth. 

Today it runs 17 schools, with two schools in development.  Its portfolio includes The Wetherby Preparatory School, Pembridge Hall and Davies Laing and Dick College in London.

Sovereign strengthened Alpha Plus’ senior management team by bringing in Paul Brett, a former teacher and strategic director of Serco's educational business, as chief executive, and Azhar Mobin, also a former teacher and head of education at the Audit Commission, as managing director.

Turnover and ebitda for the current year are forecast to increase by compound annual growth rates of 16 percent and 33 percent respectively since the time of Sovereign's original investment. 

Jamie Ritblat, chairman and chief executive at Delancey, said he was looking forward to building on the reputation of Alpha Plus and adding the firm’s real estate expertise to the excellent educational and management credentials.

It is the fifth exit from Sovereign’s first Fund, which together with previous exits has returned an average multiple of 5 times and an average IRR of 69 percent on realised returns, the firm said. The fund contains seven further investments which continue to grow.