Direct Investments

Mercia’s Software and eCommerce portfolio: Technology for growth

2nd February, 2021

As at 30 September 2020, Software and eCommerce investments accounted for five out of the Group’s top 20 direct investments representing c.25% of the total direct portfolio by value and by number. Within its managed funds, software and eCommerce investments accounted for c.30% by number of the total Group portfolio of investments.

Mercia is well positioned to continue to fund and nurture existing and new regional businesses in this fast-growing sector with strong liquidity, local presence and its Complete Connected Capital model.

Mercia’s direct and managed investments in this sector are performing strongly, scaling and generating significant interest from third parties, resulting in Mercia’s growing track record of successful exits. During an eight-week period towards the end of 2020 the Group exited three software assets, making a combined return on investment of 7.4x and an internal rate of return (“IRR”) of 39%.

Dr Mark Payton, CEO of Mercia Asset Management PLC, said:

“In respect of our proprietary investment capital, Mercia has returned approximately £20million to date from six full cash exits, three of which were from the Software and eCommerce portfolio. The sale of Clear Review announced last quarter, the strong returns from two managed funds exits, and the growing strength of the portfolio are clear indicators of Mercia’s ability to identify and nurture early-stage businesses to create value for our shareholders and fund clients alike.

“Our Software and eCommerce portfolio companies span several verticals, which ensures that we are connected to a range of opportunities within this rapidly developing sector as structural changes in the way we shop, buy and engage with others continue to accelerate. With UK start-ups and scaleups raising record investment in venture capital funding in 2020, despite challenging macro conditions, we know that the UK is outperforming many of its peers. As we move through 2021, we believe it will continue to become clear that it is in fact the UK’s regional businesses that are driving innovation and it will be these regional businesses that will play a significant role in economic recovery.”

Read the full RNS Reach here.

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