Covid-19 weighs heavy on Mercia Asset Management’s results

Photo shows: Native Antigen Company product. The company was sold by Mercia earlier this month
The Native Antigen Company_Coronavirus Antigens[2]

Mercia Asset Management PLC, the Henley-in-Arden based, regionally focused specialist asset manager, reported that assets under management increased by 58 per cent to  around £800 million this year.

Revenue increased 19.4 per cent to £12.7 million but the asset manager reported losses of £17.5 million from 2.6 million profit in 2019.

Mark Payton, Chief Executive Officer of Mercia, said: “In many ways, 2019 was a year of significant progress for Mercia as we achieved our goal of trading profitably a year earlier than planned, and significantly increased the scale of our fund management business, both key parts of our three-year strategic plan. A significant driver of this was the acquisition of the three Northern VCT fund management contracts, which helped increase our assets under management to around £800million, alongside bringing additional recurring revenues and a talented VCT investment team.

“Inevitably, the impact of the COVID-19 pandemic, and the near-term domestic and global economic shock, has negatively affected the holding values of a number of our investee companies, especially within certain sectors such as engineering.

“Notwithstanding the current reduction in asset price linked fund management revenues, Mercia has begun the new financial year trading profitably, which we expect to continue. During the COVID-19 pandemic, our focus continues to be on the health and safety of our people and ensuring our investee companies have robust cash positions. I am proud of the way we have responded as a business, which has enabled our investment teams to focus fully on supporting our portfolio. We also remain confident in the long-term potential of our direct investment portfolio, which has relatively modest capital needs. We expect the value of this maturing portfolio to accelerate post the COVID-19 pandemic.

“Looking ahead, I believe that Mercia is well placed to build on 2019’s strategic progress and position as a leading and trusted provider of regional capital. The growth of our fund management business means we have over £290million of available liquidity which, in addition to the c.£30million of liquidity on our balance sheet, gives us considerable investment capacity to support both our existing portfolio and take advantage of new opportunities at anticipated lower entry prices.”

Earlier this month Mercia announced that it had sold Oxford-based The Native Antigen Company for £18 million.

Mercia’s third-party funds under management increased to around £658 million, contributing £11.7million in revenue

The asset management company has £17.5 million gross invested into 18 portfolio companies during the year including one new direct investment, One Touch Apps trading as Clear Review.

Notwithstanding COVID-19 impact, continuing underlying commercial progress made by a number of portfolio companies including games developer nDreams, which continues to be the Group’s largest direct investment