Edison Investment Research - Mercia Asset Management (MERC) Mercia Asset Management - Scaling regional powerhouse

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Edison Investment Research

Richard Williamson

Mercia Asset Management - Scaling regional powerhouse

Merciaâ€™s FY19 results reflect continued progress across the portfolio, with the company in good shape for further growth. Net assets rose 2% to Â£126.1m, but FUM fell 5% to Â£381m due to the winding up of the successful RisingStars Growth Fund (15% IRR, TVPI of 528%). The direct investment portfolio increased to Â£87.7m, with Â£19.4m of cash invested in 17 companies, as well as Â£3.9m of fair value uplift. Mercia remains well positioned for further progress in FY20 with key portfolio companies strategically well placed, together with firepower from the groupâ€™s Â£168m of free cash and Â£30m of unrestricted balance sheet cash. The shares continue to trade at a significant discount to NAV (0.77x), even before considering the embedded value of Mercia Fund Managers (10p+).

08/07/2019 9 EN

Underlying

Mercia Asset Management

Mercia Technologies is an investment group focused on the creation/identification, funding and scaling of technology businesses from the U.K. regions. Co. directly invests across four sectors: Software & the Internet, which consists of cyber security, software as a service analytical tool, Adtech and artificial intelligence; Digital & Digital Entertainment, which consists of virtual reality, augmented reality, mixed reality and serious games; Electronics, Materials & Manufacturing/Engineering, which consists of energy and communications, value electronics, and manufacturing applications; and Life Sciences & Biosciences, which consists of diagnostics, digital health and medical devices.

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GB00BSL71W47 London Stock Exchange United Kingdom

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Edison Investment Research

Edison is an investment research and advisory company, with offices in North America, Europe, the Middle East and AsiaPac. The heart of Edison is our world renowned equity research platform and deep multi-sector expertise. At Edison Investment Research, our research is widely read by international investors, advisors and stakeholders. Edison Advisors leverages our core research platform to provide differentiated services including investor relations and strategic consulting.

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Analysts

Richard Williamson

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Mercia Asset Management - Scaling regional powerhouse

Fund management pivot bears fruit: EBITDA +37%

FY25 expected to be materially above expectations

A rarity in the sector: Revenue +19%, EBITDA +34%

Manx Financial Group - Termination of coverage

musicMagpie - Termination of coverage

Topps Tiles - Accelerating growth through Q125

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