Investment Case

Why invest in Mercia?

Mercia is a specialist asset manager focused on UK regional businesses. Our purpose is to provide tailored growth capital to regional businesses across venture capital, private equity and debt Mercia’s “Complete Connected Capital”.

We don’t just provide capital. Through extensive networks we provide the very best operational and strategic support to our portfolio companies helping them to achieve milestones far fast than their peers.

Mercia also contributes to broader regional development, promoting entrepreneurship, job creation and innovation within an Environmental, Social and Governance (ESG) framework that aims to create long term sustainable development.

Mercia has demonstrated its ability to identify investment opportunities to which others do not have access.
Mark Payton, Chief Executive  – Mercia

Key strengths - why Mercia?

Our approach to investing has evolved over many years and is predicated on the cyclical nature of private capital deployment in the regions, where optimised returns are driven through deep industry experience and buying well through the cycle.

Experienced team

We further strengthened our model of combining business expertise with geographic and investment knowledge with the addition of the VCT investment team. We have increased investment capacity across our regional offices to almost 70 investment specialists.

Mercia Platform

Seeking to strengthen portfolio performance to drive returns, Mercia’s Platform provides access to high-quality business leaders, advisory teams and operational specialists to offer relevant support and enable the development of our portfolio’s leadership teams.

Capital resource

Mercia has c.£800million in AuM (c.£142million of net assets and c.£658million in FuM) of which there is £30.2million in unrestricted free cash to invest over the next two to five years.

Regional focus

London and the South East have a significant oversupply of capital creating high pre-money valuations. The UK regions offer exciting deals with businesses that are priced sensibly and have relatively modest capital needs that we can, if we choose to, support solely from our own means.

Established partnerships

Powerful relationships and deeply embedded ecosystems provide unparalleled access to a wealth of opportunities across the regions. From our 19 university partnerships to our non-executive networks, we are well placed as the investment partner of choice.

Why invest into Mercia?

  • Large under-served market and a differentiated business model
  • Market leader with industry reputation and track record of growth
  • Long term visibility of fund management fees – 10 year average
  • Strong balance sheet with significant investment dry powder: c.£270m across client funds and c.£30m on balance sheet. Debt-free
  • 23 direct investments with high return opportunities
  • Delivering on strategy to drive growth and shareholder returns

Proud to partner with

We remain an approved partner to the British Business Bank (“BBB”), on behalf of which we manage more than £180million of funds. This is an important partnership for Mercia and the continued confidence that BBB has in the Group has been demonstrated by the deed of variation that BBB signed in April 2020, increasing the fund size by £54.3million.

Edison Group research report

Scaling, sustainable and evergreen by FY22

“Mercia’s management have set out a clear vision for the company, with the acquisition of NVM’s VCT business accelerating Mercia’s transition towards becoming a regionally focused specialist asset manager, managing fee-paying third-party funds and reducing its reliance on its own balance sheet. After a difficult 2019, investors have been seeing real value in the widened discounts to NAV in the sector as COVID-19 fears abate.”

Our road map

FY20 – FY22  First choice for investees, investors & employees

1.Become the most active investor in our target market

2.Achieve operating profitability (before balance sheet fair value movements, realised cash gains and all non-cash charges/credits)

3.Grow AuM to ≥£1bn

4.Deliver 15% IRR in equity investments

5.Fund future balance sheet investments through cash realisations

 

Complete Connected Capital

We have backed a range of innovative companies and you can find out more about them here

OXGENE

Over the course of this financial year, OXGENE has once again doubled its revenue, with a less than 50% increase in headcount. Mercia has continued to support and encourage us through this year of growth and transition.

Jocelyne Bath, Chief Operating Officer – OXGENE

 

nDreams

When we decided to partner with Mercia back in 2014 we couldn’t have chosen a better partner to support us and help us scale, as VR moved from being a great idea with huge potential to a fast-growing entertainment sector with tens of millions of active users.

Patrick O’Luanaigh, Founder & Chief Executive Officer – nDreams

Locate Bio

Mercia has the experience to understand and contextualise operational execution which is a tremendous asset

John Von Benecke, CEO , Locate Bio

Annual Report 2020

The Group is now trading profitably as a result of its fund management activities, providing further positive momentum for the Group’s future prospects.

Martin Glanfield, Chief Financial Officer – Mercia

View full report

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