Synova hits £250m hard-cap for third fund

According to David Menton, managing partner of Synova, the high demand for the fund was due to Synova's strategy of targeting UK companies in the lower mid-market, which he says continues to be under-served. LPs were also attracted to the fund because of the returns Synova has generated in its previous funds, as well as the quality of niche sub-sectors the GP targets, he added.

The fund was launched in mid-October last year with a target of £200m. First Point Equity acted as placement agent.

Synova closed its second fund on its £110m hard-cap in August 2013. This latest vehicle will follow a similar investment strategy of writing equity cheques of between £10-30m. While Synova's new fund is more than double the size of its predecessor, Menton says the GP's strategy is broadly unchanged, pointing out that a larger fund size will allow it to build a bigger and more diversified portfolio (Fund II invested in eight companies while the first fund invested in just six).

The larger fund size also reflects the high-growth nature of the businesses targeted by the GP and the time it takes to build relationships with management teams. With deals typically taking around two or three years from tracking stages to investment, the companies targeted by Synova are likely to have grown in that time, meaning the GP will likely need more firepower when the deal eventually reaches fruition.

Investors
The fund attracted commitments from endowments, funds-of-funds, family offices, pension funds and insurance companies.

A healthy proportion of existing investors re-upped into the new vehicle but Synova was keen to diversify its LP base to include more investors from the US as well as introduce Asian LPs.

Investments
The freshly raised fund will invest between £10-30m in UK companies, valued at between £10-50m. The main sectors targeted will be business services, financial services, technology, consumer, healthcare and education.

People
Synova Capital – David Menton, Philip Shapiro (managing partners).

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