b'Strategic report Governance Financial statementsIn the North of England, the NorthernDuring the year, Mercias debt team providedDirect investmentsoperational Powerhouse Investment Fund (NPIF), 14.5million of funding in 46 transactions progress: valuations impacted by with a mandate to deploy c.58million in via the EV SME Loans Fund and the NPIF COVID-19both equity and debt to SMEs in the region,debt fund. In April 2020 Mercias NPIF Valuationscompleted 32 transactions investing a total debt mandate was increased by a furtherAt the half year we reported 3.2millionof 11.8million, of which 7.0million (c.60%)30.6million, increasing the size of the NPIFof net upward fair value movements across was provided to 10 new businesses across debt fund to over 80million to supportour direct investment portfolio, and this trend the Yorkshire, Humber and Tees Valley region,profitable SMEs as they seek to recover fromwas set to continue through the second half ofwith the balance of 4.8million invested intothe impact of COVID-19. Notable amongst thethe financial year, until the emergence of 22 follow-on investments across 15 existingnew loans made was one to Rothband, whereCOVID-19. As at 31 March 2020 the value ofportfolio businesses. Cumulatively, sinceMercia supported the management of thisthe Groups direct investment portfolio was being awarded the mandate in February 2017,medical imaging business in their buy-out of87.5million (2019: 87.7million). This reflects the NPIF equity fund has invested 36.0millionan institutional investor and another toa downward movement in fair value for the full into a portfolio of 47 businesses as at Forward2me, an online logistics business,year of 15.9million after net investment in 31 March 2020. In April 2020, Mercias NPIFwhere Mercia enabled the buy-out of a retiringthe year of 15.7million (2019: 17.7million).equity mandate was increased by a furthershareholder.23.7million.We have recorded fair value gains in respectPrivate equity continued its strongof OXGENE (1.6million), The Native Antigen Within the NPIF equity fund is Abingdonperformance up to early March 2020.Company (0.6million), Voxpopme Health, a lateral flow rapid test manufacturer,Enterprise Ventures Growth Fund II (EVGII)(1.0million) and Soccer Manager (0.1million) which has been involved in the fight againstinvested 10.7million, completing three newin line with our valuation policy, which follows COVID-19. It is one of the founding members ofinvestments together with one follow-onthe International Private Equity and Venture the UKs rapid test consortium (UK-RTC) andinvestment. Most notable amongst the newCapital Valuations Guidelines (IPEVCVG). has led the assay development programme ininvestments was Total Resources Holdings, anThe fair value gains in OXGENE and Voxpopme partnership with the University of Oxford. MBO that also included 2.0million of debtrelate to third-party investment and in the support from other Mercia third-party funds.case of The Native Antigen Company, as the The North East Venture Fund (NEVF) had business is increasingly profitable and cash a solid year, concluding 13 transactions andBoth EVGF and CGF are now in theirgenerative, the uplift in fair value reflects the investing a total of 4.2million. Of thosedivestment phase although each has alreadytangible progress made.transactions, eight were new deals and fivereturned the investors original capital, were follow-on investments into existingcleared the hurdle and are now payingWe have taken a careful case-by-case review portfolio companies. The Northern VCTsperiodic carried interest to Mercia. of the likely effects of COVID-19 on each of our co-invested directly alongside NEVF inportfolio companies, and where we see that Nutshell Software, demonstrating the value the enterprise value has been affected by of our Complete Connected Capital. either delay, uncertainty, or potential dilution to our stake, we have adjusted the carrying values. We see the effects of COVID-19 being potentially significant within the automotive sector, as original equipment manufacturers (OEMs) struggle with lower demand, supply chain issues and their own funding situations. This is likely to slow progress at Warwick Acoustics and Impression Technologies.We have therefore decreased the carrying values of these companies by 5.3millionand 3.1million respectively. Mercia Asset Management PLC 27Annual Report and Accounts 2020'