Mercia Asset Management

LN: MERC

Market Cap£181.6m

Last Close 41.25p

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

FY21 was the year Mercia’s business model as a specialist asset manager matured. Mercia has built a structurally profitable, cash-generative business, with high levels (90%+) of contracted revenue and the potential for super-returns from its mature direct portfolio. In FY21, management largely achieved its FY22 strategic goals a year early (c £1bn AUM, evergreen balance sheet, sustainably profitable), with NAV per share climbing 24% to 40p and AUM rising 18% to £940m at year end. Management’s new three-year plan aims for 20% average annual growth in AUM and average PBT of £20m between FY22–24. Mercia still trades at a discount to NAV, even before considering the embedded value of the third-party fund management business (c 6.9p/share at 4% of AUM).

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 321.9
2021A 23.4 7.1 36.9 8.38 4.9 31.5
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

COVID-19 fears have largely abated and technology and life sciences sector valuations remain strong. Sustained growth in AUM and profitability, supported by material realisations and exits are the key metrics by which to judge success.

Last updated on 17/09/2021
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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 13.6 32.0 123.0
Relative* 16.5 33.6 87.3
52-week high/low 41.2p/18.8p
*% relative to local index
Key management
Dr Mark Payton CEO
Martin Glanfield CFO
Julian Viggars CIO