Mercia Technologies - Realising value

Mercia Technologies (Mercia) is a leading player in the funding and scaling of high growth companies from the UK regions, with a business model that is significantly de-risked vs peers. £400m of managed funds (Mercia Fund Managers, MFM) are used to predominately support all early-stage activity, whilst also providing meaningful revenue to offset group operating costs. As a result, the balance sheet investment is reserved for only the most promising companies or ‘Emerging Stars’ sourced from MFM. The group has a strong cash position and an experienced management, as well as a good track record, with three successful full cash exits to date. The shares trade at 0.73x NAV, not including the contribution from MFM, which we estimate at a further c 9p per share (total discount to NAV of 0.60x).