Direct Investments

Julian Viggars, CIO: Realising value: six exits mark a successful year

10th May, 2021

Mercia has solidified its position as one of the country’s leading regional investors able to drive significant and profitable realisations through its Complete Connected Capital model. Julian Viggars, Mercia’s  CIO, provides an overview of the Group’s exits in the last financial year, including OXGENE which made headlines in March 2021.

Direct investment: The Native Antigen Company – First backed 2011 – Exited July 2020

The Native Antigen Company (“NAC”) was founded by spinning out from another Mercia investment, PsiOxus Therapeutics, which itself had spun-out from the University of Birmingham. Led by a world-class team including Dr Nick Roesen, the company produces native and recombinant antigens and antibodies for diagnostic kit suppliers and early (typically pre-clinical) drug and vaccine developers. The company generates revenue from service contract work and has had a phenomenal impact on the antibody and antigen industry including several world-first developments against infectious diseases including, Zika, Dengue and COVID-19 viruses. The investment and support from Mercia was a key driver that allowed NAC to pursue opportunities in this market. Mercia first invested in NAC in 2011 through its third-party managed funds and subsequently, from its own balance sheet as a direct investment in December 2014.

Mercia announced the sale of NAC to LGC, a specialist in the life sciences tools sector, generating an 8.4x return on its original direct investment cost and a 65% internal rate of return (“IRR”).

Watch The Native Antigen Company webinar with Dr Paul Mattick and Peter Dines

Direct investment: Clear Review – First backed 2018 – Exited October 2020

Clear Review makes performance development meaningful for employees and impactful for organisations. Based on a combination of experience in performance management consulting, the latest research into employee performance and engagement, and new approaches being adopted by leading organisations, Clear Review has developed several solutions. The company, which was first backed by Mercia’s managed funds in 2018 and became a direct investment in June 2019, was sold in October 2020 to Advanced Business Software and Solutions, the third largest British software and services company in the UK.

The sale generated a 2x return on investment and a 72% IRR. In addition to this direct investment return, the sale also generated an 8x return on Mercia’s EIS managed funds investment cost and a 122% fund IRR.

Northern VCT investment: Agilitas IT – First backed in 2014 – Exited November 2020

Agilitas is the UK’s leading channel service provider, delivering managed inventory solutions and technical, lifecycle and training services based in Nottingham. Mercia’s Northern VCTs initially supported Agilitas in 2014 with an investment of £6.4million as part of a management buyout, and over the next six years continued to back the business’ ambitious national and international growth plans.

Agilitas delivered year-on-year double-digit growth over the Northern VCTs’ tenure through continued innovation and expansion of its channel service propositions and geographic footprint. It was sold to the international private equity investor Perwyn, providing an 8.4x return.

EIS investment: Refract – First backed 2016 – Exited December 2020

Refract provides sales engagement and conversation analytics that help sales teams improve conversations and close more deals. It uncovers decisive moments in sales conversations for coaching and insight. Key moments can be highlighted with effective feedback, sharing playbook moments and using AI to expose what leads to successful outcomes and top performers in an organisation. Mercia first backed the company in 2016 and made a follow-on investment in 2017.

Mercia achieved a 1.8x return on its original investment, equal to a 20% IRR.

Northern VCT investment: It’s All Good – First backed in 2014 – Exited December 2020

Gateshead-based It’s All Good, which makes pitta chips and tortilla snacks including the Manomasa range, was acquired by the Irish Valeo Foods Group in December 2020. Mercia’s Northern VCTs first invested in the savoury snack manufacturer in February 2014, backing former Union Snacks MD Calum Ryder who set up the company with Michael Weatherhead and Lynn Saul.

It’s All Good was one of four North East firms which this year made the Alantra Food & Beverage Fast 50 and was ranked one of the UK’s fastest-growing privately-owned food and drinks businesses.

Direct investment: OXGENE – First backed 2013 – Exited March 2021

Mercia’s sale of OXGENE is a great example of how Mercia’s EIS funds and its balance sheet proprietary capital work together to provide superior returns. The exit, which was announced in March 2021, reaffirms the significant opportunity and value creation potential offered by Mercia’s ‘funds first’ hybrid investment model, which is focused on promising regional companies. We refer to this as ‘the thriving regions’ and it follows the same format as our exit from The Native Antigen Company.

Mercia held a 32.1% direct holding in the business prior to completion, receiving cash proceeds of £30.7million, our largest cash exit to date.

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