Technology investor ‘poised for growth’ after good year

Mercia Technologies’ chief executive Mark Payton has declared “this is a business poised for growth” after the technology investor revealed full-year results which it said were evidence of “further positive progress”.

Revenues were up 53%, to £10.2m, and pre-tax profits up 63%, to £1.6m, in the year to March. Its key measure of net asset value per share also improved, edging up 0.3p to 40.7p.

Mercia invests through managed funds and its own direct investments, with its top 20 investments accounting for 99% of its portfolio value.

However those direct investments are “yet to deliver the fair value uplifts” that had been expected, said Mercia. It also acknowledged that the £0.6m gain it realised from its £10.5m investment in Leeds-based Science Warehouse was below what it had hoped for and expects from a portfolio company.

Investors in AIM-listed Mercia took a cautious view on its prospects, with its share price dropping more than 10% in early trading before bouncing back later in the day.

But Payton remains positive, believing Mercia has a “compelling portfolio of direct investments” while the growth of its funds under management to £400m has helped create a “very profitable” business.

It is a business which has grown quickly since it listed in 2014. Boosted by the acquisition of Enterprise Ventures in March 2016, it now has 80 staff, 19 university partners and nine offices across the Midlands, North and Scotland.

While Payton is happy with the pace of progress in England, he sees significant growth opportunities north of the border.

“I’m a big believer in picking fights we can win and I believe we can do that in Scotland,” he said.

Mercia has around £50m of investable cash and continues to see strong demand for investment, having chosen to back 5% of the 1,700 business plans it saw last year.

In the Midlands, Mercia is seeing a “huge amount of demand” in the market for its £23m proof of concept fund, which is part of the £250m Midlands Engine Investment Fund. It has seen up to 150 opportunities, which has resulted in “3-4 deals” already and has created a pipeline of valued at up to £3m.