Mercia Asset Management Share Discussion Threads

[p1nkfish] 03/12/2019 11:15

Expect revaluation of options - AGAIN.

[redartbmud] 03/12/2019 10:45

Payton good at talking the talk, and getting free shares.
The share price has been nothing short of a car crash, when are we going to see a positive sustained upward valuation in the share price?
Simple question.

[nico115] 03/12/2019 10:39

Do you listen to every Ceo chimers ?Oh dear you are v gullible !

[chimers] 03/12/2019 10:17

The big news accompanying half-time results from recently rebranded Mercia Asset Management plc (see New brand, new focus, new chair for Mercia) is an agreement to acquire the venture capital trust (VCT) fund management business of NVM Private Equity LLP for up to £25m cash and shares. The acquisition will be part-funded by a £30m placing at 25p per share, a not insubstantial 22% discount to Mercia’s 32p closing price yesterday.

This is a significant acquisition for Mercia, boosting its VCT portfolio by some £270m, and increasing Mercia’s total assets under management by over 50% to £770m. Both Mercia and NVM are prolific investors in UK tech, sometimes in the same business (see Mercia and mates pop more dosh into Voxpopme). On the face of it, this deal makes good sense. Mercia gets a huge boost to its core VCT business, while (I assume) NVM gets to focus on its knitting (small management buyouts).

I met up again with Mercia CEO Mark Payton just the other week. He has taken Mercia from being a Midlands-focused university spin-out investor to a publicly quoted, regionally focused broad-based backer of young, high-growth UK tech companies. Payton reiterated his aim to grow Mercia into an operationally profitable business (not there yet) with £1b of assets under management. The NVM deal gets him substantially closed to the latter objective. Prudent management will be required to achieve the former.

Update: Just heard back from Mark Payton - the NVM deal will push Mercia into monthly profitability and he expects they will be profitable on a trading basis in FY2021. Good stuff!

[p1nkfish] 03/12/2019 10:05

No surprise if it settles towards 22-23p over next few weeks.

Rationale for acquisition makes sense just not one that will show up in share price very quickly imho so best to be an investor not a speculator. Dyor etc.

[nico115] 03/12/2019 09:48

32p to 25pOuch chimers And this was your banker !!

[paleje] 03/12/2019 09:47

Fair point pug.

There was a column in IC a few weeks back in which Simon Thompson recommended these and he was right to do so but the numbers he guesstimated, particularly the cash holding, nave not matched up in the results out this morning or not from my notes.

They might re-vsit in view of the takeover news.

[pugugly] 03/12/2019 09:31

Much depends (imo) on the real value of their unquoted investments - How much of a discount would be prudent to apply to the "£book value" - might shades of Woodford be applicable?:

[carcosa] 03/12/2019 09:11

hxxp://www.charltonillingworth.co.uk/index.php/about/blog/

Acquisition: Acquires VCT fund management business NVM for up to £25m, £16.6m up from 75% in cash, 25% in shares. That is up to 9% of the £270m AUM, 3.5X revenue and 6.25X EBITDA. The company is raising £30m at 25p/share.

Estimates: Mercia was is forecast to make £2.1m EBITDA to March 2020 so this is transformational.

Valuation: The market cap will be £130m which is 15X historic EBITDA, but at the 25p placing price it is 12.5X

Conclusion: Of every £ of AUM at NVM 2.3% turns up in NVM’s EBITDA which is breathtaking profitability. If this can grow the shares will be a good investment.

[chimers] 03/12/2019 08:48

Yeah they couldnt have just done the results and then given us a few weeks to chew on them.
But longer term it looks like a good deal ...anyone logging into the conference call at 3pm link in the RNS?

[redartbmud] 03/12/2019 08:39

True. It has not yet recovered to the level of the 46p placing price.
Maybe next week?

[its the oxman] 03/12/2019 08:37

That said I've bought a few as deal looks attractive enough but not all I want in case price weakens further. Just a shame private investors don't get a chance to buy in at 25p

[its the oxman] 03/12/2019 08:29

Often the share price sinks to the placing price, and can take a few weeks to recover so no rush to buy.

[hiraniha] 03/12/2019 08:27

I bought at 23 pence last month and topped up this morning.Placing is annoying but it's such an underrated stock at this price.

[robsy2] 03/12/2019 08:26

Looks good to me. The acquisition looks like it fits in nicely.Max cost 33.4m GBP.AUM 270m GBP inc 83m cash. This deal brings AUM up to 770m GBP and will make MERC self sufficient.

[westcountryboy] 03/12/2019 08:20

I'm interested to hear from existing shareholders as to why you're selling (as I've just bought this morning). NVM is a class outfit which has delivered great returns in the VCT field for years. Of course they may well have overpaid for it.

[blackfinance] 03/12/2019 08:13

Sold at the bell for a 17% loss....oh well, can't win them all.

[p1nkfish] 03/12/2019 07:33

Interesting they are acquiring, appears useful over next 3-5.
Share price reaction?

[chimers] 27/11/2019 17:14

I know, that's why they said they intend on paying out "SPECIAL" dividends when they cash in some of their investments which they plan doing soon.
But main plan is growth at the moment.

[redartbmud] 27/11/2019 16:51

Went to Sharesoc event, where thry presented.
I asked about dividend policy, and was told that there is no policy to pay dividends to shareholders!

[sev22] 27/11/2019 16:31

If this closes at 0.335p tonight, from a technical point of view it is well set up to hit at least 0.39p, following the results on Monday.

[davebowler] 27/11/2019 09:25

Shares Investor Evening (Manchester)
Tuesday 17 December 2019
The Shares and AJ Bell Media evening event in Manchester is an opportunity for senior board directors from fast growing listed PLCs to make a presentation about their company and update existing & potential investors on their business plans for 2019.

During the event and afterwards over drinks, investors will have the chance to discover new investment opportunities and get to know the companies better by talking one on one with the
company directors
Shares would like all delegates to enjoy their Christmas with our compliments. A bottle of champagne awaits you to take away at the end of the evening!

Companies presenting:

Amryt Pharma (AMYT) - a revenue-generating orphan drug company focused on acquiring, developing and commercialising products that help improve the lives of patients

Mercia Asset Management (MERC) Mercia is a proactive, specialist asset manager focused on supporting regional SMEs to achieve their growth aspirations. Mercia provides capital across its four asset classes of balance sheet, venture, private equity and debt capital; the Group's 'Complete Capital Solution'. The Group initially nurtures businesses via its third-party funds under management, then over time Mercia can provide further funding to the most promising companies, by deploying direct investment follow-on capital from its own balance sheet.

[chimers] 26/11/2019 15:48

I was told Mon the 2nd but maybe he meant the 3rd.

[cheshire man] 26/11/2019 15:48

Not long to wait for results either, 03/12/2019 I think :-)