Synova Fund III attracts first Asian investors

Synova expects to double its team size as it invests the fund which, at £250m, is more than twice the size of its predecessor.

Synova Capital has held a first and final close on its third fund on its £250 million ($358 million; €329 million) hard-cap after less than three months in market, according to a statement from the firm.

Synova Capital Fund III, which had an initial target of £200 million, was “significantly oversubscribed”, according to the firm, and received “overwhelming support” from existing LPs as well as attracting new investors from Europe, the US and Asia.

Managing partner David Menton told Private Equity International that almost all of the firm’s existing LPs committed to the new vehicle.

“[The LP base] is a pretty similar mix to what we had before in terms of funds of funds, pension funds, family offices, endowments. What we’ve seen is a slight increase in the percentage of US LPs and the introduction for the first time of Asian LPs,” Menton said.

Investors in Synova Capital Fund II, a 2013-vintage vehicle which closed on £110 million, include funds of funds managers Adveq, LGT Capital Partners and SL Capital Partners, and Columbia University and Ohio State University endowments, according to PEI Research & Analytics.

Fund III will follow the same strategy as its predecessor funds, investing between £10 million and £30 million for both majority and minority stakes in UK companies in the business services, financial services, consumer brands, healthcare and education, and technology sectors with enterprise values of between £5 million and £50 million.

Fund II was fully invested in eight portfolio companies in just two years, including a £9 million investment in Vistair Systems, a provider of technology-based safety, efficiency and compliance solutions to the airline industry, financial information business Defaqto Group, and insurance broker Stackhouse Poland Holdings. The fund has capital remaining for follow-on investments.

Fund III will be looking to make between eight and 12 investments, Menton said, and expects to announce its first transactions within the next few months.

“We’ve got a very strong and exciting list of targets that we’ve built relationships with over many years, and the key for us is being able to evolve the fund size to be able to meet those opportunities,” Menton said. “We’ve got a number of opportunities in exclusivity.”

Synova currently has 10 investment professionals and is planning to make “significant further investment” in its investment team, increasing the total 14-strong Synova team by 50 percent, Menton told PEI. The firm is anticipating adding several new hires within the next year.