b'Chief Investment Officers review continuedAt Mercia we reacted swiftly to the lockdown.We are in the strong position of havingUntil the arrival of COVID-19 our debt funds Our priority was to ensure that our entiresignificant liquidity of c.320million across allwere also maintaining their good overall portfolio understood the critical need for cashour asset classes. We also have the analyticalperformance. Our Finance Yorkshire Loan management, extending their cash runways tools and skills within the team to allocateFund (FYLF) now has less than 0.1million to enable them, and Mercia, to assess thefunds effectively, both in our existing portfolioremaining to be repaid from a total of longer-term effects of COVID-19 on theirand in new opportunities for the long-term41.6million lent since the last recession in businesses. We conducted a survey of thebenefit of our shareholders and investors in2010. It has returned a total of 44.5million:portfolio at the beginning of the lockdown our funds. a legacy which is c.4million greater than was and quickly crafted and delivered a series oforiginally anticipated from this Gap Fund. webinars to support the portfolio around Portfolio updatetheir critical concerns, ranging from cashManaged funds: five exits and goodManaged funds highlightsmanagement and how to access the variousperformance by debt funds Mercia continued to invest carefully and government support schemes, to post- Investment and lending performance are atselectively during the challenging COVID-19 strategy and recovery, ensuring thatthe heart of what we do. Our third-partyenvironment created by COVID-19 in the support went beyond firefighting, looking atmanaged funds continued their prior yearfourth quarter of the financial year. We did how to manage the exit from lockdown andmomentum, performing well against theirexperience a slowdown in demand for funding position businesses favourably to takemandates. Across our managed funds, with equity syndicates weakening across the advantage of opportunities that might we invested a total of 59.7million into 109portfolio as other institutional investors and lie ahead. existing and 46 new portfolio companies.angel groups scaled back their investment activity. This placed a higher burden on the In early March we assessed the likely mediumFive exits were completed in the year, managed funds to provide greater financial and longer-term effects of COVID-19 across which have now delivered a total return ofsupport to the portfolio in the form of our portfolio of companies based on 1316.3million over the holding period of thefollow-on funding.criteria, including reliance on supply chains,investments. The most significant was management response, business disruption,Woodall Nicholson, a company in our privateOver the last year, the Midlands Engine balance sheet strength, co-investors and cashequity (PE) funds which was sold in lateInvestment Fund Proof-of-Concept Fund runway. The results provided immediateMarch 2020 to another PE house, delivering a(MEIF POC), a 23.5million fund, invested visibility of priorities and needs. Our newly9.6x return on the original cost. The Coalfields3.8million into 18 companies, 15 follow-on acquired venture capital trust (VCT)Growth Fund (CGF) invested 1.0million investments into existing portfolio companies operation was able to review and report on itsinto Woodall Nicholson in 2013, realised 1.9xand three new deals: Industrial Phycology entire portfolio of c.60 companies, including ain 2016 from a partial sale to the Business(I-PHYC), a pre-revenue start-up company revaluation of the net asset position ahead Growth Fund and, in total, realiseddeveloping a modular wastewater treatment of the 38.2million successful fundraise,9.3million. CGF as a whole has now generatedsystem based on their novel algal bioreactor; announced on 3 April 2020. We are conductingan IRR of 19.8%. Iventis, a Lincolnshire-based software regular reviews to establish whether anybusiness whose core product is a platform COVID-19 related impact on our entireA second example is Granby Marketingdesigned for a large number of users to portfolio of companies represents a temporaryServices, a marketing logistics company in ourcollaboratively plan complex operations or pause on progress or a fundamental challengePE funds that delivered a 2.13x return on costmajor events such as the Olympics; and Ebate, to their business model. via a management buyback. The EV Growtha software-as-a-service (Saas) business.Fund (EVGF) invested 1.4million into theThe MEIF POC Fund was established in 2018company in 2013. to provide early-stage capital to innovative businesses across a wide area of the Midlands.26 Mercia Asset Management PLCAnnual Report and Accounts 2020'