b'Strategic report Governance Financial statementsPortfolio overview and liquidityVenture Private equity Debt Balance sheetTotal portfolio Total portfolio Total portfolio Total portfolio233 10 119 25Total FuM Total FuM Total FuM Total NAV475.6m 59.8m 121.8m 141.5mLiquidity Liquidity Liquidity Liquidity184.4m 24.3m 76.9m 30.2mPost period end developmentsOn 1 July 2020 MIP Diagnostics (MIP) became aMercia first invested in NAC in 2011 through its Investment activity has continued since thenew direct investment. Mercias balance sheetthird-party managed funds (which as at 31 March financial year end with new funding rounds forcommitted 0.5million alongside 0.6million2020 held an additional combined stake of OXGENE, Eyoto Group and Medherant, intofrom Mercias EIS funds as part of a 5.1million20.9%) and subsequently, from its own balance which we have invested 1.0million, 0.5millionsyndicated funding round. A spinout from thesheet as a direct investment in December 2014. and 1.4million respectively. We have alsoUniversity of Leicester (a partner university) andIn addition to the direct investment returns, the continued to provide financial support to W2originally supported via Mercias managedsale will generate a 12.1x return on a blended Global Data Solutions, Warwick Acoustics andthird-party funds in 2015 (which hold a c.28%third-party managed funds investment cost and VirtTrade, as these companies make progress. equity stake in addition to Mercias direct stake),a 31% funds IRR. Mercia has proactively MIP has developed a disruptive platformsupported NAC since its first day of trading, Concepta announced its 1.9million placing intechnology seeking to address the c.$85billionincluding representation from Mercias Chief April 2020, with Mercia investing 0.7millionantibody market using synthetic antibodies via aOperating Officer, Peter Dines, as a non-(0.2million from its balance sheet andprocess known as Molecularly Imprintedexecutive director on the NAC board through to 0.5million from its EIS funds). The companyPolymers. The MIP deal also demonstrates ourexit. now has a new executive team, strategy andcontinued focus on expanding our networks of reduced cash burn rate.co-investors, with the Business Growth Fund,NAC was founded in 2010, as a divestiture from a Downing Ventures and Calculus Capital asUniversity of Birmingham spinout company, and Also in April 2020, we were pleased to announceco-investment partners. has since become one of the worlds leading that the three Northern VCTs had raisedsuppliers of infectious disease reagents, widely 38.2million in new capital through the shareWe are also working with the Future Fund on aacknowledged as being a primary source of offers that were launched in January 2020,number of investments into companies acrossreagents for the study of emerging diseases.despite what became a very challenging marketour portfolios, including 11 in our direct environment. In addition, continuing confidenceportfolio, to extend investee company liquiditySummaryin our reputation and track record wasthrough to 2021.These results reflect the strength of our diverse expressed through the additional 54.3millioninvestment platform, albeit currently impacted allocation from the British Business BankOn 9 July we announced the profitable sale ofby COVID-19, and the experienced team that has (BBB) into Mercias two existing investmentThe Native Antigen Company Limited (NAC) tomanaged these investments against a mandates covering the Northern PowerhouseLGC, a global leader in the life sciences toolsdeteriorating macroeconomic backdrop. We region, with 23.7million being allocated tosector, for a total cash consideration of up toremain cautious investors and our focus on Mercias existing NPIF equity fund and18.0million. Mercia held a 29.4% fully dilutedinvesting in regional companies with moderate 30.6million to the NPIF debt fund. Shortlydirect holding in NAC at the date of sale and willcapital needs, where we believe that we can add thereafter, we were delighted to announce thatreceive initial cash proceeds of 4.8million, withvalue, has ensured that as we enter the new we were accredited by BBB under CBILS, whichup to a further 0.4million receivable uponfinancial year we do so with a well-assembled enables us to increase our lending to all eligiblefinalisation of customary closing working capitalportfolio of companies that are aware of the regional SMEs, further underpinning both ourcalculations. The sale is anticipated to generatechallenges and opportunities that lie ahead. We leadership in regional capital deployment andan 8.4x return on its original direct investmentwill continue to add selectively to the direct our Complete Connected Capital model, as wecost and a 65% internal rate of return (IRR).investment portfolio over the coming financial entered the new financial year. year and will continue to support both it and our fund portfolios, to deliver strong long-term investment performance for our shareholders and fund investors.Julian ViggarsChief Investment OfficerMercia Asset Management PLC 29Annual Report and Accounts 2020'