Over the last six months Mercia has seen investment levels similar to those of the same period last year. Increased levels of co-investment have in part been driven by the introduction of the Future Fund initiative but certainly, capital deployment from Mercia has not slowed down as a result of COVID-19. Mercia’s CIO, Julian Viggars, sets out Mercia’s investment highlights in a difficult macroeconomic environment.
During the six months to 30 September 2020, Mercia has:
- invested £42.1million in 81 businesses across its four asset classes of venture, private equity, debt and balance sheet against an additional £46.2million in syndicated third-party investment. Highlights include:
- of the 81 companies supported, c.32% were new companies added to the broader group portfolio;
- 100% of businesses supported have been in the UK regions, outside of London;
- £10.9million invested into 14 balance sheet portfolio companies alongside £11.5million from the Future Fund and £10.5million from other investors including £3.6million from Mercia-managed funds.
Mercia benefits from a strong cash position with c.£230million of available investment capital in its third-party managed funds and £24.9million unrestricted cash on its balance sheet each as at 30 September 2020, providing strong liquidity to selectively support its portfolio.
Edison’s research – The hybrid model – halfway home provides a further progress update on our three-year strategy plan.
Our Complete Connected Capital solution has the added benefit of offering the right type of capital for investors as well as for existing and prospective investees, whether you are a private investor interested in tax-efficient investing via Mercia’s EIS or Northern VCT funds, or an institutional investor seeking investment into long-term debt, private equity or venture capital funds. Indeed, we find many investors associated with our investment activity across our managed funds are also shareholders in Mercia Asset Management PLC. We thank all our investors and shareholders alike for their belief in our regional philosophy coupled with their confidence in our ability to provide investment returns. Some of our recent highlights include:
- The sale of Woodall Nicholson for 9.6x return on investment cost in our private equity fund
- The continued strong performance of our debt funds accelerated by our CBILS accreditation
- Strong performance of our venture funds driven by exceptional returns such as our c.95x on investment cost return associated with Blue Prism plc, where we were the founding investor
- Recent return of 12x investment cost for the sale of The Native Antigen Company, again where Mercia was the founding investor. This exit was split across one of our venture funds, an EIS fund and our balance sheet proprietary capital – a real exemplar of the benefit of Complete Connected Capital for investors and investees alike
For our portfolio and future investments, we firmly believe that the most critical driver of success is innovation that will enable us to adapt to new ways of working and will help drive the necessary regional recovery, both in terms of societal and economic benefits.
Innovation such as this is often driven by small, agile and ambitious businesses; precisely the same attributes which Mercia looks for when backing new portfolio companies.