Direct Investments

Sale of Science Warehouse for £16.9m

Mercia Technologies PLC, the national investment group focused on the funding and scaling of innovative technology businesses with high growth potential from the UK regions, is pleased to announce the profitable all cash sale of Science Warehouse Limited (Science Warehouse), one of the Group’s leading direct investments, to Advanced Business Software and Solutions Limited (Advanced), for a total cash consideration of £16.9million.

Mercia will receive proceeds of £10.5million (net of transaction expenses) and will recognise an immediate realised gain of £0.6million, compared with the holding value of £9.9million as at 30 September 2017. The sale represents a return to Mercia of 14.2% on its total investment cost of £9.2million.

Advanced is the third largest UK headquartered provider of enterprise software and IT services to both the public and private sectors in the United Kingdom, with clients including Harvey Nichols, NHS Scotland, Sheffield Hallam University and Dart Group Plc.

Established in 2000 and a spinout from the University of Leeds, Science Warehouse is a provider of spend management and eMarketplace systems to commercial, government, higher education, NHS and housing customers. Its Cloud-based, Software-as-a-Service technology, drives efficiencies through the procurement process for both Buyers and Suppliers and the company also offers wider support for Source-to-Settle solutions such as analytics, contract and tender management.

Located since its formation in Yorkshire, one of Mercia’s core investment regions, Science Warehouse was the Group’s largest original direct investment (‘Emerging Star’) at the time of Mercia’s IPO in December 2014. In March 2015 Mercia made a further investment, increasing its equity stake from 45.0% to 62.6%.

The cash proceeds received will be reinvested over time into both the Group’s existing and future ‘Emerging Stars’.

Dr Mark Payton, CEO of Mercia Technologies PLC, said: “This £10.5million cash divestment, the third since Mercia’s IPO in December 2014, is further evidence of the Group’s ability to grow businesses sourced from the UK regions and then crystallise value for Mercia’s shareholders. The sale of Science Warehouse for an all cash consideration higher than the current carrying value is strong evidence of Mercia’s ability to generate profitable cash returns from its proactive portfolio management and, I believe, demonstrates the strength of our investment approach.

“This cash exit from the Group’s second largest direct investment supports our belief that the Group’s portfolio has the ability to generate significant returns for shareholders over the medium term. We continue to see high quality direct investment opportunities through our fund management activities and the proceeds received will be reinvested into both our existing and future direct portfolio of Emerging Stars.”

Philip Padfield, CEO of Science Warehouse, added: “Science Warehouse has enjoyed strong growth since Mercia became an investor in 2014 and has benefited from Mercia’s active investment strategy. Mercia’s involvement has enabled Science Warehouse to enhance its technology platform and effectively consolidate and grow in our core markets whilst developing our international presence, at the same time as strengthening our management team and meeting our growth expectations. Mercia’s involvement has undoubtedly had a positive impact on the value and scale of Science Warehouse.”

The full RNS announcement can be found here.