Sovereign races to £395m hard-cap

The UK-based GP raised its fourth fund in just five months

Sovereign Capital, a UK-based lower mid-market firm, has closed its fourth fund on its £395 million (€497 million, $655 million) hard-cap. The fund was oversubscribed.

The fund held a first close on its £350 million target in July, only four months after coming to market. It closed on its hard-cap on Thursday, Andrew Hayden, managing partner at Sovereign told Private Equity International.

The re-up rate was approximately 50 percent, but a number of new LPs had been investors in previous funds, Hayden said. “When we raised our last fund in 2010, there was a lot of over-allocation to private equity, which is why some of the endowments who had invested in our prior two funds weren’t able to commit to the new fund. Some of these endowments have backed us in Fund IV.”

Approximately a third of the investors came from the US, a third came from the UK while the remainder was made up of European investors. Sovereign attracted a mix of endowment funds, state pension funds, family offices and fund of funds. Sovereign put in a GP commitment of approximately 5 percent.

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 £120 million fund with a 2001 vintage, delivering a multiple of 3.5x to investors, the firm said.