Sovereign, Palamon complete three deals

UK lower mid-market firms Sovereign Capital and Palamon Capital Partners have had a busy week, with Sovereign completing two deals, while Palamon closed its €670m second fund and invested in a German corporate gift certificate company.

Sovereign Capital has carried out two transactions this week, including a sale generating a six times money multiple, while Palamon Capital Partners closed its latest fund and invested in a German gift certificate business.
 
Sovereign Capital has acquired business process outsourcing credit management business Avance Group alongside management in a £29 million (€42 million) transaction. The funding also includes a provision to develop the group through organic growth and acquisitions. Debt was provided by Royal Bank of Scotland.
 
The Avance deal follows Sovereign Capital’s disposal of Senad Group, a specialist education provider, earlier this week. Sovereign generated an IRR of 110 percent and a 6x money multiple in the £130 million sale to an unnamed trade buyer. Senad was formed in January 2003 by Sovereign following the £22 million institutional buyout of Honormead Schools and subsequent £9.5 million purchase of Principal Care Services.
 
Senad was Sovereign’s first exit from its Sovereign Capital Limited Partnership I fund, which closed on £120 million in May 2002. The fund has returned 1.5 times money with an IRR of 47 percent.
 
Palamon Capital Partners, a London-based growth investor, has invested €15 million ($19 million) to acquire a controlling stake in cadooz, a German corporate gift certificate company. Palamon said that cadooz is growing in excess of 50 percent per year and handles over 300,000 gift certificates annually.
 
Palamon’s other investments in Germany include Loyalty Partners, the country’s largest loyalty card scheme operator, and DAVID, which provides radio and TV software to the broadcasting industry. The firm also owns Movie Park Germany, a theme park, the remaining asset in leisure group Star Parks, sold for an undisclosed sum in June.
 
On Monday, Palamon held a final close of its second fund, Palamon European Equity II, at €670 million, more than 50 percent larger than its €440 million debut fund.