Mercia VC supplier boosted by Forward Group deal

WARWICKSHIRE-based venture capital fund manager Mercia Fund Management has boosted its position with the recruitment of private equity funding body Forward Group as a shareholder.

The move strengthens MFM’s position as a provider of venture capital and related services. Terms of the investment have not been disclosed.

Run by a team of experienced investment professionals, Henley-in-Arden-based MFM has a strong deal flow resulting partly from the investment team’s relationship with eight universities.

Forward Group is a private equity fund with over £100m of assets under management. The fund was set up in 1999 by Ray Chamberlain, one of the UK’s most successful entrepreneurs.

The group and its wholly owned subsidiary, Forward Venture Management Ltd, make and manage investments of between £250,000 and £10m in young and growing companies in the UK.

The VC supplier said it had had a longstanding relationship with Forward Group and the agreement marked the culmination of the collaboration.

Since 2006, Forward Group has been working with the team at MFM to support scalable businesses with a particular emphasis on university spin outs.

The new relationship accelerates MFM and Forward Group’s ambitions to build a fully integrated financial services business providing ‘Intelligent Capital’, portfolio ‘Support Services’ and a dedicated ‘Incubator Space’ for invested businesses across the Central England region.

MFM said its existing investment portfolio companies would benefit from a larger investment pool as Forward Group will co-invest with Mercia Fund Management. Cost savings and access to fully integrated support services will also improve MFM’s service offering.

Ray Chamberlain, chairman of Forward Group, said: “At Forward Group, we have a passion for developing high growth potential businesses. There is a strong cultural and business fit between our two organisations and, through our equity stake in Mercia, we are able to work with Mercia Fund Management on our jointly held strategic ambitions.”

Mark Payton, managing director of Mercia Fund Management, added: “The agreement with Forward Group is transformational for us and supports our long-term goal to accelerate the development of commercially successful businesses funded by Mercia Fund Management. The partnership is also a strong vote of confidence in our team and its ability to identify and mentor companies that are capable of providing sustainable businesses and profitable exits for investors.”

Following the successful launch of the Mercia Growth Fund 1 in 2012, and as a first joint initiative, MFM is set to launch the Mercia Growth Fund 2 (an Enterprise Investment Scheme/Seed Enterprise Investment Scheme hybrid fund) in March this year to invest in the 2013/14 tax year.

MFM has around £17m under active management. It established Mercia Fund 1 in 2000 as a seed fund providing support and capital to spin out projects from the Universities of Birmingham and Warwick.

In 2007, Mercia Fund 1 was enlarged and its university base expanded to cover eight universities. Also in 2007, Mercia Fund 2 was established.

Mercia Fund 1 (circa £9.5m) is an evergreen fund, investing at seed level in early stage projects from its university partners. Mercia Fund 2 (circa £5m) is a private fund that invested in later stage businesses; this fund finished making new investments in January 2012.

Mercia Growth Fund 1, a unique hybrid SEIS / EIS fund, was raised in 2012 reaching circa £2m.

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