Sovereign Capital starts the New Year with a strong deal momentum

Sovereign Capital, the UK private equity buy-and-build specialist, announces a strong start to 2007 with the completion of three new platform investments, two of which are Support Service businesses.

In the past 12 months Sovereign Capital has invested and committed over £100 million.

Andrew Hayden, Partner at Sovereign Capital, commented:

"These latest acquisitions further underline our breadth and depth in the support service and social care sectors and our focus on delivering growth through buy & build - right across our portfolio."

The highlights are as follows:

London Property Maintenance (Support Services)

Sovereign Capital has completed the £10 million buy-in / management buy-out (BIMBO) of London Property Maintenance Limited (LPM), a leading provider of contract cleaning, security and maintenance services.

Sovereign has supplied funds to finance the acquisition and has committed a further £10 million of equity to support the buy & build strategy, further developing the business through both organic and acquisitive growth. Debt has been provided by Kaupthing Singers and Friedlander Limited.

Headquartered in Kent, LPM has customers throughout the UK with the core of its business in the South East of England providing services to a broad range of clients including shopping centres, retail outlets and office buildings. The company has first class operations built around strong customer relationships and has shown consistent year-on-year growth for the past ten years. The UK cleaning and security services markets are estimated to be worth around £7 billion and both markets are highly fragmented offering significant opportunity for consolidation.

David Howroyd, who has a wealth of experience in the sector, has joined LPM as CEO. David was previously at Rentokil Initial where he held several senior executive roles across cleaning, security and pest control. He is supported by the COO, Ian Perfect, who joined LPM ten years ago, and the existing senior operational team. Michael Fetherston-Dilke (Promanex and Compass Cleaning) has been appointed as Non-Executive Chairman.

National Fostering Agency (Healthcare Services / Support Services)

Sovereign Capital has completed the institutional buy-out (IBO) of National Fostering Agency Limited (NFA), the second largest independent fostering agency in the UK, for an undisclosed sum.

Founded ten years ago, NFA provides care for over 1000 children from nine regional offices in England, Scotland and Wales and employs over 120 people. The company has put in place a robust infrastructure that well exceeds the national minimum standards in policy and procedures. In addition NFA has invested heavily in creating technology which monitors all foster children, their progress, carer availability and prospective carers.

The total funding comprises equity to finance the IBO and Sovereign Capital plans to work with the management to expand the business through both organic and acquisitive growth. Debt has been provided by Royal Bank of Scotland. Through this strategy of buy-and-build, NFA intends to further develop its customer base in the areas in which it currently operates and, in addition, to widen its geographic reach.

NFA will continue to be managed by its respected founding joint Managing Directors, Michael Lovett and Edwina Beech They will be supported by Michael Hill, formerly FD of CIC, a provider of care to people with learning difficulties and the elderly. Philip Walters has joined as Chairman. Philip is also Deputy Chairman of Danoptra and works with a number of private equity backed businesses.

Over the last ten years NFA has shown consistent growth whilst placing care at the heart of its offering. This focus on quality, standards and service is widely recognised and is reflected in the strong relationships the company has with local authorities. The fostering services market is fragmented and NFA is well positioned to take advantage of the trend towards tendering and outsourcing in children's services.

Seaflame and Camerons (Support Services)

Sovereign Capital has completed the £16 million institutional buy-out (IBO) of DC Group Limited, incorporating Seaflame and Camerons, the providers of gas maintenance services and fabric maintenance to the social housing sector.

DC Group Limited, a support services company, delivers maintenance services to social homes through long-term contracts with local authorities and housing associations. The group has two main divisions: Seaflame, the largest gas maintenance contractor in the London market and Camerons, which carries out social housing refurbishment. Established in 1946, the original founder's daughters recently made the decision to realise their interests. Sovereign was able to provide a succession solution which addressed all the vendors' issues.

Sovereign has supplied funds to finance the acquisition and has committed a further £10 million of equity to support the company's buy-and-build strategy. Debt has been provided by Yorkshire Bank Acquisition Finance.

There are approximately five million homes provided by local authorities and housing associations in the UK including 800,000 in London. The cost of refurbishing and maintaining these homes is currently in excess of £10 billion per annum with increasing service provision coming from the private sector.

Seaflame and Camerons both have a strong track records in the market and have long-established relationships with their customers, which include Wandsworth and Westminster councils. The existing management team remain with the business.