EV acquisition leads to £1.7m loss for Mercia

FUND manager Mercia Technologies, which acquired Manchester-based Enterprise Ventures in March, is to continue its focus on scaling up its direct investment portfolio despite announcing losses of £1.7m.



The funder’s direct investment portfolio increased in value by £13.5m last year to £38.1m (2015: £24.6m) such has been the expansion of the business.



However, this came at price, for while revenue rose to £1.8m (2015: £0.5m), this was all but wiped out by a pre-tax loss of £1.7m (2015: £2.0m profit).



The Warwickshire business said the loss reflected the full year investment in headcount to scale its expanded funding model.



Despite the loss, the funder said the year had been a positive one for the business as it expanded it national footprint with new agreements in the north of England and Scotland, and absorbed the acquisition of Manchester-based finance provider, Enterprise Ventures (EV).



It said the acquisition, completed in March this year in a deal worth an initial £9m plus acquired cash of £2m, was a key step in its value creation strategy.



“The acquisition has enabled Mercia to expand its regional footprint and talent pool of investment and commercialisation professionals and has also considerably widened the pipeline of potential new direct investment opportunities, as a result of the numerous investee companies which are already supported by Enterprise Ventures’ circa £200.0m of equity and debt funds under management,” it said.



EV, with offices in Liverpool, Manchester, Preston and Barnsley, currently has approximately 400 companies across its third party equity and debt fund portfolios.



During the year Mercia expanded its local presence with the opening of its office in Edinburgh and has grown its university partnerships from nine to 14, including Scottish partnerships with the University of Strathclyde and Abertay University as well as three partnerships across the North of England with the universities of York, Liverpool and Liverpool John Moores.



Post year end the number of direct investments increased to 23 following the recent investment into Concepta Diagnostics (the first Emerging Star from the Enterprise Ventures’ portfolio) in May and the number of university partnerships has grown to 18, with the addition in June of Edinburgh Napier, Heriot-Watt, Sheffield Hallam and St Andrews.



Mark Payton, chief executive of Mercia, said: “Mercia Technologies has made significant progress in the year under review. Our existing portfolio of direct investments is well balanced, having completed a number of both new and follow-on direct investments. Furthermore, we have put in place the foundations to accelerate our growth in the months and years ahead.”

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