Sovereign’s Fund II Notches First Close –

DENVER – Sovereign Financial Services in late November held a first close on its second fund-of-funds, notching just over $70 million.

Sovereign New Millennium Fund II, nicknamed “Millie II,” targets $125 million and was launched last spring (VCJ, April 1999, page 26).

The advising firm and funds-of-funds manager will hold rolling closes until it reaches its target, said Principal Mary Kelley.

Because the bulk of the vehicle’s investors are families, she said she could not disclose the names of limited partners, but Kelley said two of the first Millie fund’s lead backers returned for the sequel fund.

Although Kelley declined to disclose returns on the Sovereign New Millenium Fund, she said she showed potential L.P.s a performance bar chart that “knocks people’s socks off.” The first Millie fund wrapped on $101 million in fall of 1998 (VCJ, September 1998, page 26).

Sovereign’s funds-of-funds lean toward venture capital investing, but also back special situations and buyouts vehicles.

Millie II features a 1% management fee, which scales down for commitments exceeding $5 million, and a 5% carried interest with a 10% hurdle.

Institutional investors in Millie I include Legacy Healthcare Systems, University of Nebraska Foundation, Charles A. Dana Foundation and the Boettcher Foundation.