Mercia reveals ‘natural evolution’ as it ends direct investments

Mark Payton

Mercia Asset Management has unveiled a “natural evolution” of its strategy that will see it stop making new direct investments from its balance sheet.

The regional investor floated nearly 10 years ago with £23m of funds under management (FuM). That has now grown to £1.6bn, from institutions, retail, and the government-backed British Business Bank.

Mercia recently secured £360m across five mandates from the Bank’s regionally-focused funds in the North and Midlands, NPIF II and MEIF II.

The “Mercia 27: 100% growth” strategy is focused on building the enterprise value, and is partly a response to the stubborn share price which is at almost exactly the same price as five years ago, despite the progress made. Payton hopes the “simplified business model” will make it more attractive.

Dr Mark Payton, chief executive of Mercia, said: “Over the next three years as Mercia continues its natural evolution, and subject to shareholders approving our proposed new investment approach, we will seek to drive Assets under Management to in excess of £3.0bn whilst doubling EBITDA, focused on building value for shareholders and our other key stakeholders as a growing and sustainable, specialist alternative asset manager.”

He told “We have 11 offices across the UK now, 140 people who actively deploying third party capital – whether it’s retail, whether it’s institutional, whether it’s British Business Bank – and we’ve been performing very well across all those fronts.

“We’ve taken the lead from our capability and our strengths, and we will continue to grow third party funds under management.”

There aren’t expected to be any significant operational changes because “the change has already taken place”, said Payton, with the strategy for the next three years building on where the business currently is.

Payton added: “It sets the backdrop for what we think will be a successful three-year period that we’re facing in an environment where, ironically, two years ago, people looked at the UK and saw instability and challenges, and now in the current climate with global elections etc, the UK is looking like a stable environment to build and grow a business in – and that’s a really good place to be a provider of capital.”

Mercia is currently an investing company under the rules of the Alternative Investment Market (AIM). It is proposed to reclassify the company as a trading business, whose principal business operation is asset management.

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