Mercia exits leading VR game developer with £90m deal

Mark Payton, CEO of Mercia

Mercia Asset Management has sold its stake in a virtual reality game developer, for an enterprise value of £90.3m.

The deal with video gaming investment group Aonic for Mercia’s 33.2% stake in nDreams resulted in a total consideration of £30.2m, split £26.4m in cash proceeds and £3.8m re-invested into Aonic.

Leading VR studio nDreams was founded in 2006 by Patrick O’Luanaigh and has grown significantly in recent years to employ 230 staff, developing games including Phantom: Covert Ops, Fracked and Far Cry VR: Dive Into Insanity.

It’s been backed by Mercia since March 2014, when the asset manager invested £300k from its managed funds and then its own balance sheet in December 2014. The Henley-in-Arden-based firm said it was one of the first investors to anticipate the growth of VR, prior to Facebook buying Oculus.

Stockholm-based video game investor Aonic already made an initial £20.1m investment into nDreams in March 2022, which was to support the firm with specialist technology and infrastructure to enable them to maintain their independent identity and creative freedom.

Dr Mark Payton, CEO of Mercia Asset Management PLC, said: “This trade sale represents another profitable outcome for Mercia, realising a significant return which is above our current holding value, predominantly in cash. This latest successful exit further adds to our strong debt free cash position, which now stands at c.£60million. We look forward to announcing Mercia’s Interim Results on 28 November 2023.”

Julian Viggars, CIO of Mercia Asset Management PLC and nDreams’ board member, commented: “When we first invested in nDreams we had a high conviction in the potential of VR gaming, and this realisation is a strong validation of that thesis.

“We have proactively supported nDreams since 2014 and are pleased that we will continue to benefit from their continuing growth as part of Aonic, through our partial reinvestment”.

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