Mercia is pleased to confirm completion of the sale of Faradion for a total enterprise value of £100.0million to Reliance New Energy Solar, a wholly owned subsidiary of India-based Reliance Industries, the multinational conglomerate.
Based in Sheffield, Faradion is a world leader in sodium-ion battery technology that provides low-cost, high-performance and sustainable energy storage solutions.
Mercia held a 16.4% fully diluted direct holding in Faradion and has received initial unrestricted cash proceeds of £18.6million, plus a further £0.8million ring-fenced for three months. Mercia made its first direct investment in Faradion in January 2017 and Mercia’s managed funds have held equity stakes in Faradion since its inception in 2010.
The unrestricted cash proceeds of £18.6million result in a profit of £5.7million above Mercia’s direct investment holding value in Faradion of £12.9million as at 30 September 2021. The sale has generated an initial 4.2x return on Mercia’s direct investment cost of £4.4million and a c.72% internal rate of return (“IRR”).
The sale has also generated combined initial unrestricted cash returns of £30.4million on a total investment cost of £3.6million for Mercia’s managed funds, delivering a combined funds return of 8.4x on invested fund capital and fund IRRs of between c.30% and c.72%. Mercia has proactively supported Faradion throughout its development, including representation from Mercia’s Investment Director, Ashwin Kumaraswamy, as a non-executive director on Faradion’s board through to exit.
Dr Mark Payton, CEO of Mercia Asset Management PLC, said: “We are delighted to announce our successful exit from Faradion, delivering excellent returns for both our shareholders and fund investors. Importantly, we have once again demonstrated our ability to realise significant cash returns from our direct investments, underpinning the evergreen status of our balance sheet. This latest cash exit, which is 43.5% above September 2021’s carrying value, also demonstrates the significant potential unrealised value in the Group’s direct investment portfolio.
“I am also pleased that we can point to this Sheffield-based business where Mercia has provided both founding investment and subsequent scale-up capital, plus help in building the right management team alongside the founders. This ability to provide Complete Connected Capital alongside hands-on support to the most exciting regional businesses, is what makes Mercia an increasingly attractive investment partner for entrepreneurs.
“I would also like to congratulate Chris Wright, James Quinn and the whole Faradion team. Securing a sale to Reliance, one of India’s leading companies, is testament to the business they have created and the worldwide potential of innovation that exists in the UK regions. We wish them every success under their new ownership and are happy to see the significant ongoing investment announced by Reliance in Faradion.“
This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 which is part of UK law by virtue of the European Union (Withdrawal) Act 2018. Upon publication of this announcement, this inside information is now considered to be in the public domain.