Synova V holds first and final close on GBP 875m hard-cap

Rede Partners acted as placement agent on the fundraise, while Macfarlanes provided legal advice.

David Menton, managing partner at Synova, told Unquote that the GP set out the expected timeline for the fund launch last year. “We announced to our LPs in November 2021 that we were planning a Q2 raise as we believed it would fall in line with the continued deployment of Fund IV – we had a couple of deals that were completing and would then see the fund fully invested,” he said. “Being able to provide our LPs with a reasonable amount of notice, earmarking their commitments in advance of the new year, meant the fundraise went faster than anticipated.”

Synova IV held a final close in 2019 on GBP 365m, meaning that Synova V is around 2.2x the size of its predecessor vehicle. However, given the structure of the fund, this larger deployment capacity will not change the focus of the GP’s deal-making, Menton told Unquote.

“We’ve raised GBP 875m, but GBP 250m, the Chrysalis pool, is reserved for smaller deals,” he said. “We have strong track record of supporting high-growth smaller companies on their journey and we don’t outgrow that part of the market, where we have generated exceptional growth and enjoyed market-leading returns.”

“This is part of our 'One Synova' approach, making sure we are building the best in class into everything we do via one flagship fund and allowing our sector teams to bring their full capabilities to bear,” he added. “We always want to raise the right amount of capital for the right returns.”

The GP is confident of making further exits alongside sourcing new deals for its latest fund. “We would expect to deliver some exits over the next 12-18 months,” Menton said. “Our portfolio has been performing incredibly strongly, so we have every reason to believe it will be business as usual. We are reasonably well de-coupled from the macro, given the discipline we have maintained around the sectors we specialise in.”

The GP’s recent exits include the sale of commodity price data platform Mintec in an SBO to Five Arrows in February 2022, which saw the GP reap returns of 12x invested capital and 80% IRR.

Investors
The GP’s existing investors increased their commitments by more than 50% on average for Synova V, according to a statement. Synova V’s LP base is similar to that of its predecessor fund in terms of geographical composition, with 40% from the US, 50% from Europe, and 10% from Asia, Menton said.

LPs in Synova IV included funds-of-funds managers such as Access Capital Partners, Golding Capital Partners and LGT Capital Partners, as well as pension funds including the Texas County and District Retirement System (TCDRS), according to Unquote Data.

“The mood music in the wider market has been quite downbeat,” Menton said. “But we have been very focused on delivering our strategy and making sure we could provide a platform for our investors to continue partner with us; we prioritised our existing partners, as well as creating a small new allocation, largely for LPs who we had built relationships with over time.”

Investments
Synova V will target companies with EVs of GBP 20m-250m. The vehicle will reserve GBP 250m of its capital in its “Chrysalis pool”, focusing on investments in smaller companies. This will correspond to equity tickets of GBP 15m-150m overall, with the fund’s smaller deals falling in the GBP 15m-30m ticket range, Menton said.

The fund will continue the GP’s focus on the technology, business services, financial services and health and education sectors.

Although Synova will predominantly take a sector-based approach to its deals, the GP will seek targets in its core geographies of the UK and Ireland, and will also look for opportunities further afield. "We will look to make a handful of investments in continental Europe over the next few years, which will certainly include the DACH region and the Nordics," Menton said. "We will maintain our focus on the core sectors in which we possess significant domain expertise, where we have built a strong track record, and where we are confident we can support further growth through our value creation capabilities."

People
Synova – David Menton, Philip Shapiro (co-founders, managing partners).

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Send to  

• Topics
• Funds
• Buyout
• UK / Ireland
• DACH
• Nordics
• Healthcare
• Technology
• Support services
• Financials
• Synova Capital
• United Kingdom