LONDON: Mercia Asset Management has entered into a conditional agreement to acquire the venture capital trust (VCT) fund management business of NVM Private Equity LLP for a total maximum consideration of up to £25.0million, comprising a combination of cash and new ordinary shares in the capital of Mercia.
Mercia also announced its intention to conduct an accelerated bookbuild to raise gross proceeds of £30.0million, at a price of 25 pence per new ordinary share to fund the initial cash consideration and to provide further balance sheet growth capital.
Mark Payton, Chief Executive Officer of Mercia Asset Management PLC, said: “We are delighted to announce the conditional acquisition of the NVM VCT business, which is highly complementary to Mercia’s existing activities and will cement our position as a leading provider of complete, connected capital to SMEs in the UK regions.
By the end of FY2022, we have said that we will seek to grow AuM to c.£1billion, move the Group to a profitable trading position ahead of balance sheet fair value movements and realised gains, and evergreen the balance sheet. The acquisition of the NVM VCT fund management contracts with a high quality team also transferring to Mercia, together with a promising portfolio of VCT investee companies greatly accelerates this strategic intent.
This transaction moves Mercia to trading profitability as a Group for its next full financial year, grows AuM to c.£0.8billion and provides sufficient funds to evergreen its balance sheet. The Group’s liquidity across its balance sheet and third-party funds immediately following this transaction will be c.£250million, ensuring it is well placed to continue to support existing and new portfolio companies through the economic cycles. Mercia is making significant progress and our differentiated, scalable asset management business is well-positioned to generate significant near to medium-term value for our shareholders and stakeholders alike.”
Mercia is a proactive, specialist asset manager providing capital to high-growth SMEs, predominantly in the Midlands, the North of England and Scotland, regions with a large, growing and under-served need for capital. Mercia offers high-growth regional SMEs a complete capital solution including seed and venture capital, private equity, debt and its proprietary balance sheet capital, as well as ongoing management support.