Record year for Mercia with investments up 39% to over £281m

Mercia Asset Management – one of the UK’s most active capital providers to SMEs – invested over £281m in 2023, an increase of 39 per cent on the previous year and its highest amount in any year to date.

Mercia backed 195 companies during the year, compared to 176 in 2022.  Around 77 per cent of the total investment went to firms outside of London, in line with its mission to address the funding gap across all of the UK’s regions. Over half was in the form of venture capital, with most of the remainder being loan finance including funding from Frontier Development Capital, which Mercia acquired during 2022.

Following a number of successful exits and new third-party fund raising, Mercia now has almost £400m of capital to deploy across the group and expects to increase its investment still further in 2024.

During the year Mercia sold its largest investment nDreams, the Farnborough-based virtual reality studio, to Canadian games publisher Aonic. Others successful exits included the sale of Lancashire property services specialist Secure Empty Property to The Clearway Group, Middlesbrough games developer SockMonkey Studios to Canada’s Behaviour Interactive, and two Manchester companies – Intechnica, a tech consultancy that was sold to US-based Crosslake Technologies, and ParkVia, a parking reservation platform sold to Manchester Airports Group subsidiary CAVU.

Key investments during 2023 included Manchester-based cybersecurity business Netacea, Coventry-based industrial automation specialist Expert Technologies, electric bike delivery network Zedify, Sheffield-based sensor technology firm Tribosonics, Cambridge synthetic gene specialist Camena BioScience, and two companies whose laboratory models offer alternatives to animal testing, ImmuONE of Milton Keynes and Aelius Biotech in Newcastle.

Mercia manages assets totalling circa £1.5bn including parts of the Northern Powerhouse Investment Fund (NPIF), Midlands Engine Investment Fund (MEIF) and North East Venture Fund (NEVF) on behalf of the British Business Bank. It also manages EIS and VCT funds, and institutional capital for private equity and debt deployment.

Dr Mark Payton, CEO of Mercia, said: “At a time when the overall supply of new venture capital has been in decline, Mercia has continued to back compelling businesses located across the UK. 2023 has been a record year for us in terms of the value and volume of transactions and we expect a further marked increase in 2024.

“Our track record shows that our approach helps to nurture rising stars, build thriving start-up and scale-up communities, and create an environment for sustainable business growth, while achieving returns for Mercia’s fund investors.

“While the economic climate remains challenging, we expect the recovery to start in earnest toward the end of this year. We encourage companies to reach out to us now so we can help them strengthen their business and prepare for future growth. We look forward to supporting many more businesses in the year ahead.”

Keira Shepperson, Director of Regional Funds at British Business Bank, said: “Investment from the Northern Powerhouse Investment Fund and Midlands Engine Investment Fund has reached businesses in all corners of their regions. From companies creating groundbreaking technology in small towns to manufacturers in big cities, the opportunities that have been unlocked have helped establish thriving business communities across the North and the Midlands.”

The figures for both 2022 and 2023 include funding from Frontier Development Capital.

The Northern Powerhouse Investment Fund and Midlands Engine Investment Fund projects are supported financially by the European Union using funding from the European Regional Development Fund (ERDF) as part of the European Structural and Investment Funds Growth Programme 2014-2020 and the European Investment Bank.