Intechnica – the Manchester-based tech company which is backed by Mercia – has spun off its cybersecurity arm Netacea as a standalone company.

The separation follows a period of significant expansion for both businesses and aims to support their further growth. Intechnica provides digital transformation programmes for businesses looking to modernise their technical capability or benefit from the use of data science. Founded in 2006 by Jeremy Gidlow and Andy Still, it now employs over 70 people.

Netacea, which it started in 2018, detects bot attacks that target mobile, web and API applications. It now employs a 100-strong team and supports some of the world’s biggest brands including two of the top 10 global retailers and three of the world’s largest telecommunications networks.

Following the last investment round of £8.5m in December 2021, Mercia held a 50.6% stake in Intechnica, with 24.1% coming from its direct funds and the remainder from its Northern VCTs, the Northern Powerhouse Investment Fund (NPIF) and the North West Fund for Venture Capital (NWFVC). Mercia’s holdings in both companies will be equivalent to its previous holding in the combined group.

Jeremy Gidlow (pictured), CEO of Netacea, said: “Thanks to the support of our investors, Netacea looks forward to another year of explosive growth and innovation. It’s an exciting time for Netacea as we continue our growth into the US market, coupled with adding more experience to our senior leadership team.”

Julian Viggars, CIO of Mercia, commented: “Netacea was recently named by Forrester as a ‘Strong Performer’ in its 2022 Bot Management wave. It has seen explosive growth thanks to the strength of its team, business model and the rapidly growing demand for cybersecurity solutions. By separating Netacea from Intechnica to a standalone company, it will benefit from a more specialised focus that will help it further capitalise on significant growth opportunities. In Netacea and Intechnica we have two exciting businesses and we look forward to continuing to support them both through their next stages of growth.”

Sean Hutchinson at British Business Bank, said: “It is very positive to see how funding from the Northern Powerhouse Investment Fund has contributed to the success and rapid expansion of Intechnica and its subsequent spin-out Neteacea. It’s a great example of how growth finance can make a significant and measurable difference to fast-growing businesses across the Northern Powerhouse region, creating a more prosperous regional economy.“We are pleased that NPIF has continued to support high-growth businesses in the North, providing vital funding to enable job creation and expansion into new markets.”

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.

 

Mercia Asset Management PLC, the proactive, regionally focused specialist asset manager with c.£959million of assets under management (“AuM”) is pleased to announce its preliminary results for the year ended 31 March 2022.

We provided a live management presentation and Q&A, presented by Dr Mark Payton, Chief Executive Officer, Martin Glanfield, Chief Financial Officer and Julian Viggars, Chief Investment Officer.

 

Read the full RNS here
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Mercia Asset Management PLC, the proactive, regionally focused specialist asset manager with c.£959million of assets under management (“AuM”) is pleased to announce its preliminary results for the year ended 31 March 2022.

Highlights

  • Adjusted operating profit up c.152% to £8.4million (2021: £3.3million)
  • Realised gains and finance income totalling £12.2million generated from the sale of Faradion
  • £11.4m fair value movement in direct investments, including fair value uplift of £6.7million in nDreams following significant third-party investment
  • Profit before taxation of £27.4million (2021: £34.0million)
  • Proposed final dividend up c.67% to 0.5 pence per share (2021: 0.3 pence per share)
  • Net assets of £200.6million (2021: 176.0million)
  • Net Assets per share up c.14% to 45.6 pence (2021: 40.0 pence)
  • Cash and short-term liquidity investments of £61.3million (2021: £54.7million)

Managed fund developments

  • Third-party funds under management (“FuM”) of c.£758million (2021: c.£764million) contributed £19.5million in revenue, excluding performance fees, for the year (2021: £18.2million)
  • Cash returned to fund investors from successful realisations of c.£87million (2021: c.£27million)
  • Venture FuM c.£592million (2021: c.£600million)
    • £15.7million successfully raised across three Enterprise Investment Scheme (“EIS”) funds during the year
    • c.£15million additional allocation from British Business Bank under the Northern Powerhouse Investment Fund Equity mandate, with effect from 1 November 2021
    • Interim and final dividends totalling £17.0million paid by the three Northern Venture Capital Trusts (“VCTs”), in addition to special dividends paid of £20.8million arising from successful realisations
  • Private equity FuM c.£48million (2021: c.£54million)
    • Portfolio trading and prospects improving post pandemic
  • Debt FuM c.£118million (2021: c.£110million)
    • Accreditation awarded to the Group to deliver debt funding under the Recovery Loan Scheme (“RLS”)
    • c.£11million additional allocation from British Business Bank under the Northern Powerhouse Investment Fund Debt mandate, with effect from 1 November 2021

Direct investment portfolio developments

  • Direct investment portfolio fair value of £119.6million (2021: £96.2million), up c.24% notwithstanding the significant investment realisation of Faradion, completed in the year
  • Sale of Faradion in January 2022 resulted in total cash receipts of £19.4million (including a £1.5million loan repayment), generating £9.9million of realised gains together with crystallised loan interest and redemption premiums totalling £2.3million for the year
  • £18.4million net invested into 16 portfolio companies (2021: £15.4million net invested into 19 portfolio companies), including new direct investments into Forensic Analytics Limited and Pimberly Limited
  • Completion of a significant third-party investment into nDreams, resulting in a £6.7million fair value increase to the Group’s investment holding value as at 31 March 2022

Post year end developments

  • In April 2022 the Group’s AuM surpassed £1.0billion, with the three Northern Venture Capital Trusts raising £40.0million through the allotment of new shares, plus Mercia’s maiden Knowledge-intensive Impact EIS Fund raising £4.5million. Both successes reflect continued confidence in the track records of the VCT and EIS portfolios and the investment teams who manage them
  • Demerger from Intechnica of its cybersecurity bot-management business Netacea, to allow both companies to benefit from a refined focus on capitalising on their respective significant growth opportunities. Mercia retains stakes in both businesses post demerger equal in value to its previous holding value
  • Exciting commercial progress continues to be made by the direct investment portfolio
  • Mercia has been accredited as a carbon neutral organisation, demonstrating its commitment to ESG principles

Mark Payton, Chief Executive Officer of Mercia, commented:

“I am pleased to share a set of results that showcase the strength and maturity of Mercia and its business model. The significant success that we have seen during the last two financial years, and our positive future prospects, have been made possible by the combined efforts of everyone connected with Mercia. I would therefore like to express my sincere gratitude to the amazing portfolio companies that we have the privilege to support. As a Group, we are also very appreciative of the growing belief in Mercia from our third-party fund investors, and both VCT and Mercia shareholders, that the UK regions can deliver value and returns. Finally, I would like to thank Mercia’s employees, without whom we would not have become who we are today: #OneMercia.”

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Mercia‘s Investment Director, Ash Kumaraswamy gives us a better understanding of what Deep  Tech is, its role within society, Mercia’s investment philosophy and what the future of this market looks like.

Ash also casts the spotlight on many of the Mercia-backed companies such as Faradion, Libertine, Mindtrace, Tribosonics, Netacea and many more.

Read more from Ash here

History often informs our actions. Today, we see many similarities with the 1970s – high inflation, energy price hikes, climbing interest rates pushing up national debt and full employment – albeit conceivably temporary in nature. With indicators pointing towards a sharp economic levelling with the real possibility of a near-term recession, regardless of whether you recognise these as parallels in history or as new challenges, refreshed attitudes are needed.

The age we are living in is increasingly uncertain. Concepts we have considered foundational to our existence – like the widespread health of populations in mature economies or an era of peace in Europe – are no longer as assured. But what is certain is that Mercia will meet these challenges with a spirit of optimism, seeking clarity in a dynamic and rapidly changing environment. As a purpose-led organisation, we operate with a mindset of opportunities rather than challenges.

Mercia was founded with the intent of addressing the regional funding and investment support gap. When we began to address this funding disparity back in 2010, Mercia was a team of five working in one room in the Midlands. Today, we are a team of over 120 with eight regional offices around the UK, including our recently opened office in Bristol. I believe that our focus on solutions, instead of obstacles, has been pivotal to this successful growth.

This attitude is encapsulated in Mercia’s success in Deep Tech investments, particularly when others were reluctant to invest in the space.

Deep Tech businesses are often seen as capital-intensive early-stage concepts, notorious for taking a longer time to generate returns than conventional consumer-facing businesses. Mercia views these businesses through different eyes, recognising the role these regional SMEs have as ‘enabling technology’ businesses. We back innovators who look at capital-efficient ways to use existing base technologies to solve global problems. Last year, our exit from Faradion was a great showcase for this approach of combining patience with capital capability. Our successful sale of Faradion saw us pass the baton of this emerging business to Reliance Industries for a £100million, full-cash exit. Faradion focuses on using existing manufacturing capabilities and modified technologies to create a sodium-ion battery platform. The business continues to grow in the UK, now supported by its new owner. Libertine is also worth mentioning. After listing Libertine last year, it accessed the scale-up capital it needed to accelerate its growth as an innovative developer of smart engines for automotive and distributive power generation set-ups.

Excitingly, our Deep Tech pipeline remains strong. Many of these next-generation businesses are providing creative solutions to environmental challenges and supporting mature economies in their quest to achieve net zero.

Nova Pangaea in the Tees Valley is a promising portfolio company that is primed for international expansion. To help resolve the problem of crops, such as corn, being harvested for use in fuel, Nova Pangaea uses non-food plant residues to develop advanced biofuels and other chemical products.

Other portfolio businesses, such as Tribosonics and Slingshot Simulations, are applying scientific research to reduce the impact of waste on the environment. The smart sensors that Tribosonics develops help industries monitor the degradation of parts to support the development of more efficient and sustainable outcomes. Leeds-based Slingshot takes large, accumulated datasets that are currently neglected and transforms them into legible insights that are actionable in sectors including logistics and urban planning.

We are also encouraged by the progress of two Midlands-based businesses – Warwick Acoustics and Impression Technologies. Despite industries such as car manufacturing experiencing setbacks and delays during the pandemic, these companies have demonstrated remarkable resilience. As electric vehicles become more commonplace, Warwick Acoustic’s low power, superlight speakers are primed to help reduce power usage by reducing the weight of cars. Impression Technologies, with its highly scalable pressing technology, is enabling aluminium’s additional strength and lightweight advantages to be a solution to what will, no doubt, be a commonplace demand in vehicle manufacture.

Our approach to responsible investing is to provide the capital that will allow more purpose-led businesses to continue growing, so that SMEs can positively impact their communities, their regions and the people they serve.

Mark Payton

CEO, Mercia Asset Management PLC

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Mercia is pleased to announce completion of a second tranche investment round of £4.3million into existing direct investment portfolio company, MIP Diagnostics Limited, a UK-based nanotechnology business.

As part of this round Mercia invested £1.1million from its own balance sheet, alongside existing syndicate investors including the Business Growth Fund, Downing Ventures and Calculus Capital. This funding round has increased Mercia’s fully diluted direct investment stake to 10.1%.

Based in Bedfordshire, MIP Diagnostics is a market leader in Molecularly Imprinted Polymer (“MIP”) technology. The business has developed and patented a novel design and development process to make nano-scale molecularly imprinted polymers (“nanoMIPs”), that act as synthetic antibodies for use in diagnostic devices, such as biosensors and other next-generation in vitro diagnostic tests. nanoMIPs offer significant differentiators over traditional antibodies due to their robust nature, coupled with best-in-class sensitivity and selectivity, as well as reduced cost of production.

Mark Payton, CEO of Mercia Asset Management, said: “As a founding investor in this University of Leicester spinout, Mercia remains a proactive supporter of MIP Diagnostics in its rapid growth journey. This latest oversubscribed funding round is testament to the exciting potential of its nanoMIPs platform technology, to drive the acceleration of discovery in Life Sciences and bring next-generation products to market faster and more cost-effectively. We look forward to continuing to work with MIP Diagnostics as they expand their talented team and move towards the industrialisation of their technology.”

Read the RNS here 

 

Forensic Analytics are digital forensic experts. It combines innovative analytics software with vast sector expertise to assist government agencies and law enforcement.

Mercia Asset Management PLC is pleased to confirm completion of the sale of Faradion Limited for a total enterprise value of £100.0million to Reliance New Energy Solar Limited, a wholly owned subsidiary of India-based Reliance Industries Limited, the multinational conglomerate.

CEO, James Quinn tells us more about the product and how Mercia’s support has seen the Sheffield-based world leader in sodium-ion battery technology is going from strength to strength.

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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.

Read the RNS here 

 

Mercia is pleased to announce that its direct investment portfolio company Intechnica has completed an £8.5million funding round to accelerate its growth in both the UK and US markets. Mercia has invested a further £1.2million from its own balance sheet, alongside a £5.0million investment by the Mercia advised/managed Northern VCTs and £2.3million from existing private investors and Rupert Cook, the recently appointed non-executive chairman of Intechnica’s cybersecurity business, Netacea.

Following this investment, Mercia holds a 24.4% fully diluted direct equity stake in Intechnica Group, with the Northern VCTs holding a further 10.6% fully diluted equity stake.

Watch as Group CEO, Jeremy Gidlow, explains a little more about its cybersecurity platform, and the help and support Mercia has given to the Manchester-based tech company.

Read the RNS here