The Equity Fund Managers from the British Business Bank’s regional funds – the Northern Powerhouse Investment Fund (NPIF), the Midlands Engine Investment Fund (MEIF) and the Cornwall & Isles of Scilly Investment Fund (CIOSIF) have all become signatories of the Investing in Women Code, a commitment by financial services firms to improve female entrepreneurs’ access to tools, resource and finance from the financial services sector.

The Northern Powerhouse Investment Fund’s (NPIF) dedicated equity fund managers Maven Capital Partners and Mercia Asset Management, that lead delivery of NPIF – Maven Equity Finance and NPIF – Mercia Equity Finance across the North West, Yorkshire, the Humber and Tees Valley have committed to the Code.

Launched by HM Treasury, the Code commits organisations to promoting female entrepreneurship by having a nominated member of the senior leadership team who will be responsible for supporting equality in access to finance. It also increases the transparency of financial services firms’ data concerning support for female entrepreneurs and encourages adoption of internal practices to improve the outlook for female entrepreneurs.

More than seven in 10 (71%) NPIF funded businesses had at least one woman in their senior management team according to data from the mid-term evaluation of the Fund. Funding from NPIF has supported businesses in increasing workforce skills, bringing new products and services to market and improving business resilience.
Among the seven in 10 NPIF-supported businesses with women in leadership positions, around three in seven had women accounting for at least half of their senior management team. Teesside-based biomass pioneer Nova Pangaea Technologies, Lancashire recruitment firm Fresh Perspective and mental wellbeing technology company Moodbeam are among the female-led businesses supported by NPIF.

Catherine Lewis La Torre, CEO at the British Business Bank, said: “The Investing in Women Code represents a commitment to advancing female entrepreneurship in the United Kingdom. It sets out clear objectives and guidance to signatories and its progress is reported on annually. It is designed to drive a more diverse and inclusive business ecosystem which is beneficial to customers, entrepreneurs, businesses, investors and society.

“At the British Business Bank our goal is to break down barriers for entrepreneurs who face challenges in accessing the finance they need to prosper and grow. Our regional equity funds are brilliant examples of what can be done. The Bank is working with a large number of female founders forming part of an inclusive network of like minded entrepreneurs and investment partners, helping to bridge what was once a significant gender gap.”

Christina Colmer McHugh, Founder and Director at Moodbeam, said: “The support Moodbeam has received from the Northern Powerhouse Investment Fund and Mercia has been fantastic. Thanks to investment, we have been able to continue to innovate and grow throughout our journey, bringing a valuable product to market at a crucial time. It is fantastic to see the British Business Bank’s regional equity funds sign up to this Code, and commit to greater support for female business leaders seeking investment.”

Karen de Meza, Portfolio Director at Maven, said: “Whilst there have been positive signs of change, female founders sadly remain few in number and still face many challenges when it comes to securing venture capital. It perhaps begins with perceptions around what an entrepreneur looks like, aligned with gaining access to venture capital firms and their networks, and a lack of representation of women in the industry may not always support that. The Investing in Women Code is a positive step towards eliminating biases and providing greater opportunities to women in business.”

The Northern Powerhouse Investment Fund project is supported financially by the European Union using funding from the European Regional Development Fund (ERDF) as part of the European Structural and Investment Funds Growth Programme 2014-2020 and the European Investment Bank.

 

About The Northern Powerhouse Investment Fund
• The Northern Powerhouse Investment Fund will invest in Microfinance, Business Loans and Equity Finance sub-funds which will offer financing ranging from £25,000 to £2m, specifically to help small and medium sized businesses secure the funding they need for growth and development.
• The Northern Powerhouse Investment Fund is operated by British Business Financial Services Limited, wholly owned by British Business Bank, the UK’s national economic development bank. Established in November 2014, its mission is to make finance markets for smaller businesses work more effectively, enabling those businesses to prosper, grow and build UK economic activity,
• The Northern Powerhouse Investment Fund is supported by the European Regional Development Fund, the European Investment Bank, the Department for Business, Energy and Industrial Strategy and British Business Finance Limited, a British Business Bank group company.

• The NPIF covers the following LEP areas: Tees Valley Combined Authority, Greater Manchester, Cheshire and Warrington, Cumbria, Liverpool City Region, Lancashire, Hull and East Yorkshire, Leeds City Region, South Yorkshire Mayoral Combined Authority, York & North Yorkshire
• The project is receiving up to £140,359,192 of funding from the England European Regional Development Fund as part of the European Structural and Investment Funds Growth Programme 2014-2020. The Department for Levelling Up, Housing and Communities is the Managing Authority for European Regional Development Fund. Established by the European Union, the European Regional Development Fund helps local areas stimulate their economic development by investing in projects which will support innovation, businesses, create jobs and local community regenerations. For more information visit www.gov.uk/european-growth-funding.
• The funds in which Northern Powerhouse Investment Fund invests are open to businesses with material operations, or planning to open material operations, in, Yorkshire and the Humber, the North West and Tees Valley.

About the British Business Bank
The British Business Bank is the UK government’s economic development bank. Established in November 2014, its mission is to drive sustainable growth and prosperity across the UK, and to enable the transition to a net zero economy, by improving access to finance for smaller businesses. Its remit is to design, deliver and efficiently manage UK-wide smaller business access to finance programmes for the UK government.

The British Business Bank’s core programmes support over £8.5bn[1] of finance to almost 95,000 smaller businesses[2]. The British Business Bank is responsible for running the government’s Coronavirus business loan schemes and Future Fund, together responsible for delivering £80.4 bn of finance to 1.67m businesses. The schemes are now closed to new applications.

As well as increasing both supply and diversity of finance for UK smaller businesses through its programmes, the Bank works to raise awareness of the finance options available to smaller businesses. The British Business Bank Finance Hub provides independent and impartial information to businesses about their finance options, featuring short films, expert guides, checklists and articles from finance providers to help make their application a success. In light of the coronavirus pandemic and EU Exit, the Finance Hub has expanded and it now targets a wider business audience. It continues to provide information and support for scale-up, high growth and potential high growth businesses, but now provides increased content, information and products for businesses in survival and recovery mindsets. The Finance Hub has been redesigned and repositioned to reflect this, during this period of economic uncertainty.

Data on NPIF support for businesses involving women in leadership roles is taken from a forthcoming interim assessment of NPIF. In 29% of supported businesses women accounted for at least half of the senior management team in the respective business. An additional 42% of supported businesses had at least one woman in their senior management team but had an overall senior management team composition where women took up fewer than half of the positions. This means 71% (=29% + 42%) of businesses had at least one woman in their senior management team.

 

 

Mercia has invested £1.6million as part of a £10.0million syndicated round into existing direct investment Locate Bio, a Nottingham-based business developing a range of orthobiologics.

This investment into Locate Bio consists of a syndicated £10.0million Series A round in which Mercia has made a direct investment of £1.6million, alongside £4.0million from Mercia’s third party managed funds, which included EIS and VCT capital, together with £3.0million from BGF and £1.4million from other syndicate partners. This funding round has increased Mercia’s fully diluted direct investment stake to 18.1%, with Mercia’s combined managed funds’ fully diluted stakes now totalling 24.6%. Locate Bio was initially backed in April 2018 by Mercia’s EIS funds.

Locate Bio’s products will be used by orthopaedic surgeons to accelerate the natural repair of bone and cartilage. Addressing a multi-billion pound global market, Locate Bio currently has four products going through trials, the first targeting formal market approval by 2022. This £10.0million round will support the next stages of these trials including its lead bone graft solution (“LDGraft”) as part of the FDA approval process, as well as the development of additional products acquired last year.

Peter Dines, COO of Mercia Asset Management, said: “This significant investment round, alongside our continuing active approach to supporting the business and its management team, is another example of how our Complete Connected Capital can help accelerate growth, with investment not only by our balance sheet but also by our managed funds and syndicate partners. As Mercia’s representative on the Locate Bio board, this latest investment is testament to the significant potential market value and global reach of the products Locate Bio is currently developing.”

Soccer Manager – the UK-based online soccer management game – has secured a further £3m to support its continued growth in a funding round led by its existing investor Mercia.

The latest investment, which comes from Mercia’s own funds, the Northern Powerhouse Investment Fund and the Government’s Future Fund, will allow it to grow its user base in the Middle East and Far East through local language translations, further develop its SM 2022 game, which is due to launch this autumn and relaunch its original multi-player game, SM World, by creating new apps and adding new features.

Soccer Manager has grown revenue by over 80% since the launch of ‘Soccer Manager 2021’ in September last year. Its games are now played in 234 countries around the world and have been downloaded by more than 50 million players, attracting more than one million active users each month.

Founded in Preston in 2004 by soccer-loving brothers, Andy, Chris and Steven Gore, the company employs over 40 staff. Soccer Manager is a good example of Mercia’s Complete Connected Capital model. It was first backed with a loan from one of Mercia’s managed debt funds in December 2013, then received investment from Mercia’s EIS funds in December 2014 and received its first direct investment from Mercia’s proprietary capital in March 2015. Mercia now holds a fully diluted direct investment stake of 39.0% with a further 7.6% held by Mercia’s managed EIS funds.

Andy Gore, CEO of Soccer Manager, said “We founded Soccer Manager with a vision to create high-quality football games that the whole world could play.  We have always had the view that football, mobile and the internet is a powerful combination to achieve this vision. After years of building out our IP, technology, and games to millions of people worldwide, this investment will add significant fuel to our current growth trajectory and ambitions.

We are delighted to have Mercia as a partner that continues to share our vision and we look forward to the next stage of our journey together.”

Julian Viggars, CIO of Mercia Asset Management, said: “The video gaming market was estimated to be worth $159.3billion in 2020[1], which is a considerable increase of c.9% from 2019, in part due to the changes in the leisure time spend we have seen following the start of the COVID-19 pandemic. Soccer Manager is a great example of an innovative, regional business, which, with the determination of its founders, has scaled its recurring customer base and revenues to achieve high-quality games with a very loyal community. The business was already on a strong growth trajectory before the pandemic, but with the increasing numbers of ‘at home gamers’ not expected to slow down, we anticipate that there is further significant potential in this asset.”

Ken Cooper, Managing Director at British Business Bank, said: “The Northern Powerhouse Investment Fund continues to provide vital funding to innovative businesses across the region. We are working with Mercia and our other appointed fund managers to make a real impact on business communities, creating jobs and supporting innovation by providing access to funding and  unlocking the North’s potential.”

Yorkshire accountants and business advisers Garbutt + Elliott provided fundraising advice to Soccer Manager.

The Northern Powerhouse Investment Fund project is supported financially by the European Union using funding from the European Regional Development Fund (ERDF) as part of the European Structural and Investment Funds Growth Programme 2014-2020 and the European Investment Bank.

 

[1] https://www.wepc.com/news/video-game-statistics//

As at 30 September 2020, Software and eCommerce investments accounted for five out of the Group’s top 20 direct investments representing c.25% of the total direct portfolio by value and by number. Within its managed funds, software and eCommerce investments accounted for c.30% by number of the total Group portfolio of investments.

Mercia is well positioned to continue to fund and nurture existing and new regional businesses in this fast-growing sector with strong liquidity, local presence and its Complete Connected Capital model.

Mercia’s direct and managed investments in this sector are performing strongly, scaling and generating significant interest from third parties, resulting in Mercia’s growing track record of successful exits. During an eight-week period towards the end of 2020 the Group exited three software assets, making a combined return on investment of 7.4x and an internal rate of return (“IRR”) of 39%.

Dr Mark Payton, CEO of Mercia Asset Management PLC, said:

“In respect of our proprietary investment capital, Mercia has returned approximately £20million to date from six full cash exits, three of which were from the Software and eCommerce portfolio. The sale of Clear Review announced last quarter, the strong returns from two managed funds exits, and the growing strength of the portfolio are clear indicators of Mercia’s ability to identify and nurture early-stage businesses to create value for our shareholders and fund clients alike.

“Our Software and eCommerce portfolio companies span several verticals, which ensures that we are connected to a range of opportunities within this rapidly developing sector as structural changes in the way we shop, buy and engage with others continue to accelerate. With UK start-ups and scaleups raising record investment in venture capital funding in 2020, despite challenging macro conditions, we know that the UK is outperforming many of its peers. As we move through 2021, we believe it will continue to become clear that it is in fact the UK’s regional businesses that are driving innovation and it will be these regional businesses that will play a significant role in economic recovery.”

Read the full RNS Reach here.

We are delighted to announce that Diane Seymour-Williams has been appointed as a Non-executive Director of Mercia with immediate effect.

Diane is a non-executive director of Standard Life Private Equity Trust plc, PraxisIFM Group Limited and SEI Investments (Europe) Ltd and is a director of Acorn Capital Advisers Limited. Most recently, Diane was also a non-executive director of Brooks Macdonald Group Plc, serving a nine-year tenure. Diane has significant industry experience, having worked at Deutsche Asset Management Group (previously Morgan Grenfell) for over 23 years where she held various senior positions, including CIO and CEO for Asia. Diane subsequently spent nine years at LGM Investments Limited, a specialist global emerging and frontier markets equities manager, where she was global head of relationship management. Her non-executive experience spans the quoted wealth and asset management, global equity, private equity, investment services and VCT sectors. She is a pro-bono member of the Investment Committees of Newnham College, Cambridge and the Canal & River Trust.

Ian Metcalfe, Non-executive Chair of Mercia Asset Management PLC, said: 

I am delighted to welcome Diane to our Board. She has longstanding and deep experience in the funds and asset management space, and she has a very good understanding of the sectors in which we operate, notably Venture Capital Trusts and other closed-end funds. I have no doubt that she will make a strong contribution to our Board debates as Mercia continues to prove out its model and we work towards fulfilling its strategic objectives. I also believe that Diane will broaden the diversity of the Boards thinking and prove to be an excellent addition to Mercia Asset Management.”

                                                    

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.