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The creation of a new UK ‘unicorn’ in the shape of software company Blue Prism highlights the value of patience on the part of investors, according to the Chief Executive of the company’s first investor, Mercia Fund Managers.
As Blue Prism’s market value has risen above $1.0billion, Mercia’s Chief Executive Officer Dr Mark Payton said it showed that tech firms needed access to patient capital to support them at every stage of their development if the UK was to achieve more unicorn companies.
Mercia first invested in Blue Prism in 2004 through its RisingStars Growth Fund and continued to support the company right up until March 2016, when it floated on AIM with an initial market cap of £49.0million. Mercia has realised 75x the fund’s investment cost based on an original investment of £0.9million and continues to hold circa 2.5% stake in the business.
Speaking at Mercia’s annual Gala Dinner in Birmingham, Dr Payton said:
“Mercia was the first investor in Blue Prism and we supported the company throughout. It was 12 years before it floated on AIM and a further two years before we started unwinding our position. During that period we had good times and bad times, but our persistence has paid off. Patience is at the heart of everything we do at Mercia.
“Currently the US dominates the world in terms of the number of unicorn companies it creates. US companies achieve much bigger valuations on flotation, because US funders invest more heavily and look to the long term rather than selling out to a trade buyer at an early stage. The Patient Capital Review has been a real fillip to our industry, but we need to change our approach and recognise the true value of taking a more long-term, strategic approach to supporting technology firms.”
Julian Viggars, Head of Technology Investments at Mercia, said:
“The success of companies like Blue Prism shows that it is possible to build highly scalable, market leading businesses out of the UK’s regions. Alastair and his team are the true pioneers of the Robotic Process Automation software market and the rapid global growth and adoption that is now happening. They are proving the real value in their platform with significant levels of new customer wins and expansion across the US, Asia Pacific and EMEA. Our latest realisation makes for stunning returns for our Fund’s patient investors – some 14 years after they first backed us.”
Based in the North West, one of Mercia’s core investment regions, Blue Prism is a leader in robotic process automation, which enables its blue-chip clients to create a digital workforce powered by its software robots that are trained to automate routine back-office clerical tasks.
Mercia Technologies PLC, the national investment group focused on the funding and scaling of innovative technology businesses with high growth potential from the UK regions, is pleased to announce that one of its third party managed funds, the RisingStars Growth Fund, has completed a further cash realisation from Blue Prism Group plc, representing to date a 55x return on the Fund’s original investment.
Blue Prism, a global leader in Robotic Process Automation, listed on AIM in March 2016 at 78.0pence per share, with a market capitalisation of £49.0million. Today, the UK-based software company is valued at in excess of £600.0million. The aggregate cash return to date for the Fund totals £49.1million which provides a 55x return on the original £900,000 invested. This excludes the potential value of the remaining 4.9% stake still held in Blue Prism by the Fund.
Blue Prism is located in one of Mercia’s core investment regions in the North West of England and received initial investment from the Fund (which is managed by Enterprise Ventures Limited, a Mercia wholly owned subsidiary). The investment is led by Julian Viggars, Head of Technology Investments at Mercia, who has been personally involved with Blue Prism since the early seed rounds in 2004.
As with many of Mercia’s managed funds, the Group will benefit from a modest profit share/carried interest. Mercia does not have a direct stake in Blue Prism as the Fund’s investment occurred prior to Mercia’s acquisition of Enterprise Ventures.
As part of this realisation, £49.5million has been returned to the Limited Partners. This includes £26.2million to the UK Government – 2.6x its original investment – managed through the British Business Bank, the UK government’s economic development bank.
Julian Viggars, Head of Technology Investments at Mercia Technologies PLC, said:
“Our support of Blue Prism illustrates the use of patient capital at its best as it was identified by our team at an early stage in 2004. Blue Prism’s market capitalisation has risen by more than 12x since listing, generating significant returns for the Fund which has retained a holding and we will remain a supportive investor as the company continues to grow its market leading position. This is an excellent example of Mercia’s Complete Capital Solution delivering significant shareholder returns through the identification of exciting technology investment opportunities with growth potential.”
Enterprise Ventures is pleased to announce the successful flotation on the London Stock Exchange’s junior market, AIM, of Blue Prism. Blue Prism, which is part of the RisingStars Growth Fund portfolio, is a market-leader in developing and supplying a virtual workforce powered by software robots, known as Robotic Process Automation (“RPA”). It has a blue-chip customer base including Barclays Bank, Co-operative Banking Group, Telefónica O2, RWE npower and Shop Direct.
To read the full announcement, click here.