Sovereign hits first close for £350m third fund

Fund

Sovereign Capital has held a first close of its third fund, Sovereign Capital Limited Partnership Fund III, at around 40% of its £350m target. The fund, which is based in London, is structured as a traditional 10+2 year LP. The £350m target is 27% larger than the size of Sovereign's second fund, which closed on its hard-cap in May 2005 at £275m. Macfarlanes provided legal advice. Sovereign declined to comment.

Investors

Investors in Sovereign funds tend to hail from Europe, mostly funds-of-funds; the US, mostly endowments; and the UK, mostly family offices. Each region accounts for around a third of the total investment. Funds-of-funds investing in the second fund include Access Capital Partners, Danske Private Equity, Nordea Investment Management, Robeco Private Equity and Wilshire Associates Europe.

Investments

Sovereign funds typically invest £5-30m of equity in UK lower mid-market companies with an enterprise value of between £10-15m, in the firm's traditional areas of expertise: training and support services, healthcare, education, leisure and funeral-related businesses. As a buy-and-build specialist, Sovereign funds historically invest in approximately 3-5 portfolio companies per year, looking to make about 8-10 bolt-on acquisitions to these targets.

People

Andrew Hayden and Ryan Robson are the main managers of the fund, supported by a team of approximately 20 investment professionals based in London.

Name: Sovereign Capital Limited Partnership Fund III

Closed on: Approximately 40% of target

Target: £350m

Focus: Buyouts, growth

Address: Sovereign Capital

25 Victoria Street

London SW1H 0EX

Tel: +44(0)20 7340 8800

Fax: +44(0)20 7340 8811

Advisers: Macfarlanes (Legal).

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• Buyout
• UK / Ireland