Mercia Asset Management

LN: MERC

Market Cap£130m

Last Close 29.5p

Mercia Asset Management is a regionally focused specialist asset manager. Its stated intent is to become the leading regional provider of supportive balance sheet, venture, private equity and debt capital in transaction sizes typically below £10m.

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Investment summary

Mercia announced an attractive exit from Faradion (#2 holding) in January 2022 (for £100m, cash proceeds to Mercia of £19.4m and an uplift of c 1.5p per share) as well as Aonic’s £20.1m investment in nDreams (#1 holding) in March 2022, implying a £78m valuation for nDreams and an uplift for Mercia of £8.1m (1.8p per share) from its September 2021 carrying value. As the sector has been squeezed, Mercia trades at an attractive discount to its H122 NAV/s of 42.4p and an even deeper discount to our FY22 estimated NAV/s of at least 46p (before factoring in the profitable third-party funds business).

Y/E Mar
Revenue (£m)
EBITDA (£m)
PBT (£m)
EPS (p)
P/E (x)
P/CF (x)
2020A 12.7 0.3 (15.5) (4.55) N/A 230.2
2021A 23.4 7.1 36.9 8.38 3.5 22.6
2022E N/A N/A N/A N/A N/A N/A
2023E N/A N/A N/A N/A N/A N/A
Industry outlook

Technology valuations had a very strong run in 2021 as COVID-19 fears eased, with sustained valuations amidst a robust funding environment. With the market rotation towards value and out of growth, sector discounts have widened across the board, but the underlying portfolio performance has remained robust. This may present an attractive buying opportunity for longer-term investors.

Last updated on 30/06/2022
Content on Mercia Asset Management
Mercia Asset Management – Another good exit: 4.2x ROI, 72% IRR
TMT | research Flash note | 6 January 2022
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Share price graph
Balance sheet
Forecast net debt (£m) N/A
Forecast gearing ratio (%) N/A
Price performance
%
1m
3m
12m
Actual (0.8) (12.3) (15.1)
Relative* 5.7 (6.8) (13.5)
52-week high/low 43.2p/28.2p
*% relative to local index
Key management
Dr Mark Payton CEO
Martin Glanfield CFO
Julian Viggars CIO