All small businesses that deserve finance and support across the UK should have equal access to the growth capital they need, regardless of their location in the UK. This, however, is not the case. Venture capital, debt finance and equity investment remain unevenly distributed across the UK regions, meaning that some communities of entrepreneurs, founders and business owners have fewer options to sustain or accelerate business growth. Without a doubt, this set of circumstances has become even more challenging this last year, which has featured multiple market phases. What started on a note of optimism for economic recovery from COVID-19 restraints was replaced with rising interest rates and inflation, driven by high energy prices, escalating the cost-of-living crisis and political instability.
Mercia’s proven hybrid business model allows us to be proactive in supplying capital from seed investment through scale-up and growth. With the ability to invest through cycles, Mercia’s third-party funds help insulate regional businesses from the chill of a downswing, owing to initiatives such as regional funds provided by British Business Bank, the Enterprise Investment Scheme (EIS) and venture capital trusts (VCTs). We work closely with our portfolio companies to, in part, shield them from any syndication risk as capital withdraws (as it has done so on previous occasions) from the UK regions. At this moment in time, the market might be increasingly stressed, but Mercia is not.
Key to both the success of Mercia and its growing portfolio is to ensure that we provide the right capital at the right time to the right business. As a domestic investor with a focus on SMEs, we are intent on ensuring that great businesses have the capital firepower to become recognised global brands.
With circa 120 employees operating across the UK from our eight regional offices over the last two years, we have helped management and founders towards 40 trade sales and four initial public offerings, returning a combined circa £250m to investors in our regional funds, national EIS and VCT funds, and Mercia’s shareholders. During this same period, we have invested £xxm into yy businesses, bringing an additional £ym alongside our investment. A clear demonstration of the evident value can be found across the UK – region by region.
Mark Payton
CEO, Mercia Asset Management PLC