Mercia Asset Management

LN: MERC

£116.6m market cap

25.3p last close

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.

Investment summary

As a regionally focused specialist asset manager, the acquisition of NVM’s VCT business in November 2019 accelerates Mercia’s aim to be the UK’s leading regional investor and achieving an evergreen balance sheet. With the associated placing, Mercia has extended its cash runway, strengthened its share register, increased the free float and reduced its share overhang. Yet Mercia’s shares continue to trade at a discount to NAV – even before considering the embedded value of the fund management business.

Y/E Mar
Revenue (£m)
EBITDA (£m)
PBT (£m)
EPS (p)
P/E (x)
P/CF (x)
2018A 10.2 (0.4) 3.5 1.17 22.6 N/A
2019A 10.7 (1.4) 3.0 1.00 26.5 N/A
2020E N/A N/A N/A N/A N/A N/A
2021E N/A N/A N/A N/A N/A N/A
Industry outlook

After a difficult 2019 for patient capital, Woodford-related issues are now being actively resolved and with a recovery of sentiment there is the scope for the closing of NAV discounts. The acquisition of NVM’s VCT business accelerates Mercia’s transition from investing off its own balance sheet towards increasingly becoming a manager of third-party funds. This reduces the monthly cash burn and takes Mercia a significant step forward, with management targeting an evergreen funding model by FY22.

Last updated on 24/02/2020
Sector
TMT
Share price graph
Balance sheet
Forecast net debt (£m) N/A
Forecast gearing ratio (%) N/A
Price performance
%
1m
3m
12m
Actual 0.8 (14.5) (31.2)
Relative* 3.1 (17.3) (34.4)
52-week high/low 38.5p/23.1p
*% relative to local index
Key management
Dr Mark Payton CEO
Martin Glanfield CFO
Julian Viggars CIO

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