Direct Investments

Mercia strive towards new 20:20 vision

We are delighted to share some of the headlines from our recent preliminary results published earlier this month. Without doubt, these record results have reinforced our reputation as one of the most dominant regional investors in the UK.

Despite the constraints of the COVID-19 pandemic, Mercia has returned comprehensive growth in the key metrics identified in our three-year strategic objectives (set in 2019). AuM increased by c.18% this past year, rising from c.£800m to c.£940m, within touching distance of the £1billion set out in the objectives. Consolidated net assets increased from c.£142m to c.£176m and third-party FuM increased from c.£658m to c.£794m over the past year.

Achieving operating profitability was the next objective in our three-year strategic plan. Through significant growth in AuM, alongside a well-established culture of financial discipline, Mercia is in a profitable and sustainable position. Over the past year, we have produced an adjusted operating profit (excluding net performance fees) of c.£3.3m (up from c.£0.5m last year), another strong performance despite enduring the struggles of lockdown.

Evergreening the balance sheet was the final element of our three-year strategic plan, underpinned by four cash exits generating £37.0million  and £20.3million in realised gains. Our objective has always been to fund our direct investment activities through consistent cash realisations from our portfolio, and with such a strong shadow portfolio and the strength of Mercia’s platform and networks, which the NEDs are an critical part of, we are confident in delivering our new three-year strategy – Mercia 20:20.

We remain ambitious to deliver significant long-term growth in shareholder value and Mercia 20:20’s objectives are aligned with this goal.  Over the next three years, on average, we will aim to grow total AuM by 20% per annum and deliver £20.0m profit before tax per annum.  The need for connected capital to support UK SMEs is substantial and growing and we are uniquely positioned to significantly contribute to fulfil this critical need. The attainment of these new objectives will  further enhance Mercia’s reputation for being first-choice for its employees, investors and investees.

As for ESG, responsible investment has always been part of the Mercia DNA, and that statement has never been more relevant than this past year. Adding value to regional communities is an integral part of Mercia’s financial return motivation, as is the creating of jobs in these the UK’s regions.

The ability to call upon a plethora of skills and strength of character that manifests itself in the business, has enabled Mercia to make decisions guided with its core values. Culture of empowerment, trust and entrepreneurial spirit has allowed Mercia to put in place innovative investment solutions to support the Mercia vision and as a result, deliver these record results.