TIDMMERC
Mercia Asset Management PLC
02 February 2021
REACH 2 February 2021
Mercia Asset Management PLC
("Mercia" the "Company" or the "Group")
Software and eCommerce portfolio update
Mercia Asset Management PLC (AIM: MERC), the proactive,
regionally focused specialist asset manager with c.GBP872million of
assets under management, is pleased to provide an update on its
portfolio of Software and eCommerce investments across both its
direct portfolio and managed funds.
As at 30 September 2020, Software and eCommerce investments
accounted for five out of the Group's top 20 direct investments
representing c.25% of the total direct portfolio by value and by
number. Within its managed funds, software and eCommerce
investments accounted for c.30% by number of the total Group
portfolio of investments.
Mercia is well positioned to continue to fund and nurture
existing and new regional businesses in this fast growing sector
with strong liquidity, local presence and its Complete Connected
Capital model.
Mercia's direct and managed investments in this sector are
performing strongly, scaling and generating significant interest
from third parties, resulting in Mercia's growing track record of
successful exits. During an eight-week period towards the end of
2020 the Group exited three software assets, making a combined
return on investment of 7.4x and an internal rate of return ("IRR")
of 39%.
Dr Mark Payton, CEO of Mercia Asset Management PLC , said: "In
respect of our proprietary investment capital, Mercia has returned
approximately GBP20million to date from six full cash exits, three
of which were from the Software and eCommerce portfolio. The sale
of Clear Review announced last quarter, the strong returns from two
managed funds exits, and the growing strength of the portfolio are
clear indicators of Mercia's ability to identify and nurture
early-stage businesses to create value for our shareholders and
fund clients alike.
"Our Software and eCommerce portfolio companies span several
verticals, which ensures that we are connected to a range of
opportunities within this rapidly developing sector as structural
changes in the way we shop, buy and engage with others continue to
accelerate. With UK start-ups and scaleups raising record
investment in venture capital funding in 2020, despite challenging
macro conditions, we know that the UK is outperforming many of its
peers. As we move through 2021, we believe it will continue to
become clear that it is in fact the UK's regional businesses that
are driving innovation and it will be these regional businesses
that will play a significant role in economic recovery."
Exits
Direct investment - Clear Review Limited ("Clear Review")
On 19 October 2020, Mercia announced the sale of Clear Review
for a total cash consideration of up to GBP26.0million. This exit
demonstrated Mercia's Complete Connected Capital model. The company
was first backed by Mercia's managed funds in 2018 as the founding
investor and became a direct investment in June 2019, prior to
being sold to Advanced Business Software and Solutions Limited, the
third largest British software and services company in the UK. Of
the total cash proceeds of GBP5.0million, GBP1.0million represented
a 2x return on Mercia's direct investment (72% IRR) and the
remaining GBP4.0milion an 8x return on Mercia's EIS managed fund
investment (122% fund IRR).
Managed funds - Agilitas IT Solutions ("Agilitas")
On 30 November 2020, Mercia's three Northern VCTs announced that
they had sold their stakes in Nottingham-based Agilitas to the
global private equity investor Perwyn, providing an 8.4x return.
Agilitas is the UK's leading channel services provider, delivering
managed inventory solutions as well as technical, lifecycle and
training services. During the Northern VCTs' six-year tenure with
the company, the business continued to deliver double-digit growth
though the expansion of its channel service propositions and
geographic footprint. The sale represented an excellent return for
Mercia's Northern VCT shareholders.
Managed funds - Refract Limited ("Refract")
On 11 December 2020, Mercia exited from its managed fund
investment in Refract, representing a 1.8x return on the fund's
original investment, equivalent to a 20% IRR. The Newcastle-based
company, which provides sales engagement and conversation analytics
that help sales teams improve conversations and close more deals,
was acquired by the US software firm Allego. The deal was built on
a year-long partnership between the two companies, during which
time aspects of Refract's technology were integrated into Allego's
capability.
Portfolio update
The summaries below consolidate publicly disclosed information
on Mercia's direct and managed funds' investments in Software and
eCommerce. No new information is disclosed within.
Direct investments
Intechnica Group Limited ("Intechnica") - 27.5% fully diluted
direct investment and 20.7% fully diluted stake held by Mercia's
managed funds
Manchester-based Intechnica has developed a bot management
solution for high volumes of website traffic. Intechnica's bot
solution complements its professional services business which helps
organisations transform and grow through consulting, software
engineering and practical machine learning and AI applications.
Intechnica has annual sales of c.GBP10million and in July 2020
secured syndicated funding of GBP5.0million from Mercia's
proprietary capital, the Northern Powerhouse Investment Fund
("NPIF"), and the Future Fund.
Voxpopme Limited ("Voxpopme") - 17.1% fully diluted direct
investment stake with a further 14.1% fully diluted stake held by
Mercia's managed funds
Birmingham-founded and now with most of its operation in the US,
Voxpopme is a video insights platform that provides innovative
video analytics for tier one international clients such as
Microsoft, Shell, Coca-Cola, Verizon and Expedia. Voxpopme has
annual sales of approximately of $6million and scaling, and in
November 2020 secured a syndicated investment of GBP3.1million.
W2 Global Data Solutions Limited ("W2") - 16.2% fully diluted
direct investment stake with a further 12.7% fully diluted stake
held by Mercia's managed funds
Cardiff-based W2's software as a service ("SaaS") tools provide
real-time identity verification services to help organisations
prevent fraud and money laundering. Mercia first invested
GBP2.0million in October 2018. A recent syndication of
GBP1.0million included GBP0.3million of Mercia's proprietary
capital to provide working capital to support continued
double-digit revenue growth in a market now estimated to grow from
$2.2billion to $4.5billion by 2025.
Third-party managed funds' investments
The following is a selection of promising businesses within
Mercia's third-party managed funds, which represent potential
future candidates for Mercia's direct investment portfolio.
SHE Software Limited ("SHE") - Mercia's managed funds hold fully
diluted stakes totalling c.32%
SHE, based in Glasgow with operations in the UK and North
America, provides market-leading health and safety software
solutions. The company was quick to respond to COVID-19 with the
launch of new functionality addressing customer needs during
lockdown and providing practical operational support for companies'
return to work. Momentum remains strong, with 38 new customers in
the past six months, maintaining the business' six-year 40%+
compound annual growth rate ("CAGR"). In February 2020 the company
received GBP7.0million of investment, with Mercia's Northern VCTs
contributing GBP1.0million.
Clarilis Limited ("Clarilis") - Mercia's managed funds hold
fully diluted stakes totalling c.33%
Leamington Spa-based Clarilis is a drafting automation platform
working with leading law firms, in-house counsel and content
providers worldwide in all legal practice areas. Mercia's Northern
VCTs participated in a new GBP6.0million investment round together
with Gresham House in August 2020. This followed major client wins
including Gowling WLG, Slaughter and May (UK), Arthur Cox (Ireland)
and Oon and Bazul (Singapore), partnerships with content providers
such as FromCounsel and the opening of the company's first
international office in Singapore.
Gecko Labs Limited t/a GeckoEngage ("GeckoEngage") - Mercia's
managed funds hold fully diluted stakes totalling c.7%
GeckoEngage, headquartered in Edinburgh, is an educational
technology business that works with leading universities across the
world to improve their student recruitment, driving efficiencies
and conversion rates. Its SaaS tools include an event management
solution platform and a bot-enabled conversational messaging
platform that helps schools communicate with students one-to-one,
across multiple channels. In July 2019 GeckoEngage raised
GBP3.0million in a syndicated investment round that included
Mercia's managed funds . Since this initial investment, the company
has grown its ARR to GBP2.5million and is now profitable.
CurrentBody.com LTD ("CurrentBody") - Mercia's managed funds
hold fully diluted stakes totalling c.26%
This Cheshire-based online retail specialist has secured growth
capital funding of c.GBP10million following five years of rapid
growth. The business has successfully launched its own-brand
product range and complementary skincare range and is present in 12
international territories. The company has relocated to the North
West digital and tech hub, SciTech, at Alderley Park to house its
expanding team.
Oddbox Delivery Limited ("Oddbox") - Mercia's managed funds hold
fully diluted stakes totalling c.23%
Oddbox is behind the UK's first sustainable fruit and vegetable
box delivery service. Mercia's Northern VCTs participated in a
GBP3.6million investment round together with angel investors and
Seedrs in March 2020, following significant growth in the preceding
12 months, fuelled by increased demand for sustainable shopping
options. The business has since expanded outside London, across
South East England, continues to rescue tonnes of produce from
going to waste and has accelerated its growth during the past six
months.
-Ends-
For further information, please contact:
Mercia Asset Management PLC
Mark Payton, Chief Executive Officer
Martin Glanfield, Chief Financial Officer +44 (0)330 223
www.mercia.co.uk 1430
Canaccord Genuity Limited (NOMAD and Joint +44 (0)20 7523
Broker) 8000
Simon Bridges, Emma Gabriel, Richard Andrews
N+1 Singer (Joint Broker)
+44 (0)20 7496
Harry Gooden, James Moat 3000
+44 (0)20 3727
FTI Consulting 1051
Tom Blackwell, Louisa Feltes, Shiv Talwar
mercia@fticonsulting.com
About Mercia Asset Management PLC:
Mercia is a proactive, specialist asset manager focused on
supporting regional SMEs to achieve their growth aspirations.
Mercia provides capital across its four asset classes of balance
sheet, venture, private equity and debt capital: the Group's
'Complete Connected Capital'. The Group initially nurtures
businesses via its third-party funds under management, then over
time Mercia can provide further funding to the most promising
companies, by deploying direct investment follow-on capital from
its own balance sheet.
The Group has a strong UK footprint through its regional
offices, 19 university partnerships and extensive personal
networks, providing it with access to high-quality deal flow.
Mercia currently has c.GBP872million of assets under management
and, since its IPO in December 2014, has invested c.GBP106million
into its direct investment portfolio.
Mercia Asset Management PLC is quoted on AIM with the EPIC
"MERC".
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