Sovereign Capital announces first exit from fund I

Sovereign Capital Partners LLP ("Sovereign Capital"), the independent lower mid-market UK private equity provider, has realised its investment in specialist education provider SENAD Group ("SENAD"), through the sale of the Group in a £130m deal to an unnamed corporate buyer. The transaction has generated an IRR of 110% and represents a return of 6x money.

This is the first exit from the £120m Sovereign Capital Limited Partnership I fund ("SCLPI"), which closed in May 2002. SCLP I cash returns have now exceeded 1.5x money, with a Fund IRR of 47%. SCLPI has a further 14 investments following a similar buy-and-build strategy.

SENAD, which operates residential schools for children and care homes for young adults with Special Education Needs ("SEN") in Derbyshire, Staffordshire and Wales, was created in January 2003 by Sovereign Capital from the £22m institutional buy-out of Honormead Schools and the subsequent £9.5 million acquisition of Principal Care Services. Since then, the Group has grown both organically and through three further acquisitions, Tregynon Hall, Aran Hall and Orchard School. Today, SENAD offers over 400 places for children and young adults across seven schools and is the pre-eminent dedicated provider of SEN schools in the country.

Sovereign Capital recruited the SENAD management team, which will remain with the Group. Terry Lee, previously Chief Executive, becomes Chairman; Brian Jones, previously Operations Director, becomes Chief Executive and Kathryn Baines continues as Finance Director.

Sovereign Capital is the most active UK investor in health and social care. Recent investments include the £22m acquisition of Alkare, the specialist provider of residential care for adults with mental health needs.

Ryan Robson, Partner at Sovereign Capital, commented:

"SENAD is an excellent schools group, providing the very best in specialist education and care standards. We have been able to deploy both our knowledge of the sector and our buy & build expertise to support management in the growth of the Group.

Terry Lee, Chairman of SENAD Group, said:

"SENAD has become a market leader through a combination of management's focus on providing quality education and care and Sovereign's buy-and-build expertise. We look forward to further developing the business"