Mercia is pleased to announce the profitable sale of one of its direct investments, Clear Review,  for a total cash consideration of up to £26.0million.

Mercia held a 4.0% fully diluted direct holding in Clear Review at the date of sale and will receive cash proceeds of £1.0million representing a 2x return on its investment and a 72% IRR. In addition to this direct investment return, the sale will also generate an 8x return on Mercia’s EIS managed fund investment cost and a 122% fund IRR.

The company, which was first backed by Mercia’s managed funds in 2018 and became a direct investment in June 2019, has been sold to Advanced Business Software and Solutions, the third largest British software and services company in the UK.

Clear Review, which was founded by Stuart Hearn, former HR director at Sony, is a SaaS tool providing organisations with data and systems to improve performance management. Under Stuart’s leadership the company quickly met its commercial milestones, passing £2.0million in annual recurring revenue in December 2019, up 100% from the previous year. Mercia portfolio director Nigel Owens was a non-executive director from December 2019 until the sale.

Stuart Hearn, CEO of Clear Review, said “We’re extremely proud of the success of our Clear Review platform and its role in improving business performance and developing talent around the world. The acquisition will enable us to accelerate Clear Review’s growth as well as integrate with Advanced’s HR solutions, helping organisations retain their best talent and increase performance.”

Dr Mark Payton, CEO of Mercia Asset Management, said: “Clear Review is now our fifth full cash exit from the direct investment portfolio, coming just three months after we announced the sale of The Native Antigen Company. We have been consistent in our stated objective to both source and exit deals well, and I am pleased that we have been able to again demonstrate our execution of this strategy through another successful exit.

“The team at Clear Review has achieved great things in a relatively short period of time and I am confident that under their new custodian they will continue to disrupt the HR SaaS sector.

“This sale process has been handled entirely virtually, which is testament to our team’s effectiveness in transacting deals even during these complex times.”

 

Mercia is pleased to announce that its direct portfolio company Warwick Acoustics has secured £2.1million of recent syndicated investment, including £0.5million from Mercia. The Company has also recently won a £0.4million grant from Innovate UK, in conjunction with the University of Warwick.

Warwick Acoustics is one of Mercia’s earliest investments, having received its first investment through Mercia’s managed funds in January 2013 before becoming a balance sheet direct investment in December 2014. As at 31 March 2020, Mercia held a 52.9% fully diluted direct holding in Warwick Acoustics.

The Company, which is based in state-of-the-art facilities at the Mira Technology Park in Warwickshire, develops highly innovative audio products for both the automotive audio market and the personal and studio headphone market.

Despite the challenges in the automotive industry as a result of the COVID-19 pandemic, Warwick Acoustics is continuing to make good progress in both the automotive and headphone markets.

Reflective of this progress the Company was recently awarded a grant from Innovate UK to support the development of lower cost designs for its lightweight, highly power-efficient ElectroAcoustic Panels. Targeted manufacturing cost reductions will enable the Company to significantly expand the reach of its technology from premium to mass market vehicles.

Combined, this significant funding provides sufficient development capital to support the Company’s expansion plans for at least the next 15 months.

Mike Grant, Chief Executive Officer at Warwick Acoustics, commented:

“The COVID-19 pandemic has created new challenges for the automotive industry. Government regulations and new cash flow pressures are requiring OEMs to rationalise model ranges to reduce costs and to focus on accelerating developments of Electric Vehicles (EVs) this in turn has placed a premium on light-weighting and power-efficient technologies in order to increase range and improve the attractiveness of EVs.

“The recent investment in Warwick Acoustics and the award of an Innovate UK grant under highly competitive conditions recognise the class leading weight savings and power efficiency of our high- performance, patented ElectroAcoustic Panel technology. With this combined funding, we are in an excellent position to take the next step in our goal of disrupting the way in which in-car entertainment is delivered.”

Mark Payton, Chief Executive Officer at Mercia, commented:

“We believe Warwick Acoustics has a compelling product set and is well positioned to capitalise on both the increasing demands from the automotive industry for smaller, lightweight, quality audio as well as similar trends from consumers. We are pleased to continue supporting the business in delivering on these commercial opportunities through a meaningful syndication. Businesses such as Warwick Acoustics have significant potential to help the automotive industry by reducing weight, space and costs within an emission-focused regulatory environment. We therefore continue to be encouraged by the business’s significant potential to assist the increasingly innovative automotive industry.”

Life Sciences investments accounted for seven out of Mercia’s top 20 direct investments as at 31 March 2020 and their cumulative fair value of £28.6million represented 32.7% of the total portfolio by value.

All of Mercia’s Life Sciences direct investments originated from our third-party managed funds and in addition to these investments, We have a further c.40 Life Sciences investments across its third-party managed funds.

In the current financial year to date £4.2million has been invested into six Life Sciences direct investments, with a further £1.6million invested by Mercia’s managed funds.

Mark Payton, Chief Executive Officer at Mercia, commented:

“The Life Sciences sector represents a significant growth area in the UK’s regions and is well positioned to benefit from current trends. We are excited by the progress we are seeing in both our direct investments and managed funds, and the potential of our portfolio demonstrates the value and innovation in the UK healthcare sector. Today’s update is an important indicator that the life sciences’ community is predominantly located outside of London and that not only is it resilient, but it is fast growing.

“Mercia has demonstrated its ability to identify investment opportunities to which others do not have access. By continuing to invest and nurture early-stage regional Life Sciences businesses, we make it possible for the UK’s technology industry to have a real impact in tackling global issues, build regional employment and create demonstrable shareholder value.”

 

Read the full RNS Reach here.