Mercia Asset Management Share Discussion Threads

[sharesoc] 08/5/2018 21:54

Mercia Technologies presentation and stockopedia report from our Birmingham seminar on the 1st May is available in our members area:

[mw8156] 22/4/2018 17:06

thanks wan - good background info.

[wan] 21/4/2018 14:36

I have been keeping tabs on one of Mercia portfolio companies, Faradion, a company focused on the development and commercialisation of advanced, low-cost battery materials.

Faradion was identified by Mercia as an 'Emerging Star' from Enterprise Ventures' managed funds portfolio that they acquired in 2016.


Mercia have a direct holding of 13.6% and 37.2% via Mercia Fund Managers -


In January 2017 Mercia invested an initial tranche of £1.3million which represents an equity holding of 13.6%. Dependent on the completion of specific performance related milestones, a second tranche of £600,000 will be invested within the next 18 months. The current investment round will be used to commercialise Faradion's lead product, a novel, low-cost sodium-ion battery technology from which Mercia believes significant value will be derived over time.




I note that recently, Faradion have created a new and significantly updated website


So it would appear, on the face of it at least, that Faradion have progressed towards the point of completing the specific performance and milestones criteria for the second tranche of Mercia's investment, which should further increase our stake.


There is some interesting and recent news flow regarding the award of government funding for Faradion -

Posted 28 March, 2018 — Press
£2 Million Project to Develop Sodium-ion Batteries for Automotive Power Applications
The project aims are to develop and demonstrate low cost 12V batteries for electrified vehicles. These batteries are used for lighting, security and control of the traction battery management system and other critical features. Generally, in electrified vehicles, these batteries use lead acid technology on account of their low cost and specialised requirements.

The consortium is seeking to replace these batteries with lower weight and lower volume batteries of comparable cost and performance based on sodium-ion chemistry, a technology which uses more sustainable and lower cost materials than lithium-ion technology but is otherwise very comparable.

The consortium members include Jaguar Land Rover the automotive supplier, Croda the specialty chemicals company who will be developing electrolyte additives, Talga Technologies who will be focussing on natural carbon anodes, Faradion Ltd the developer of sodium-ion batteries and Warwick University home to the Warwick Manufacturing Group and the centre for battery pilot plant manufacturing in the UK.

Posted 28 March, 2018 —
£1.1 Million Project to Develop Anode Materials and Cell Scale-up for Sodium-ion Technology.
Faradion Ltd has been awarded a prestigious Innovate UK grant for the development of their sodium-ion technology for residential energy storage, in collaboration with University College London and Aceon Battery Solar Technology Ltd.


Posted 23 March, 2018 —
Printable Hard Carbon Electrodes for Na-Ion Batteries with Extra Capacity (PHOENIX)
Faradion has been working with Dyctotec Materials Ltd and Warwick Manufacturing Group on the Innovate UK funded project, PHOENIX, to develop an environmentally friendly, high performance negative electrode for use in sodium ion batteries.



One of Faradion's partners, Haldor Topsoe, states the following -

Through our partnership with Faradion, we are able to offer high energy density and long-life sodium-ion (Na-ion) cathode materials.

Faradion is leading the way in Na-ion technology, which is inherently more cost-efficient than comparable Li-ion technologies. Faradion’s Na-ion technology is a drop-in solution for Li-ion cell manufacturers.



In 2014 Topsoe invested directly in Faradion, the original press release is well worth reading -

Topsoe invests in UK-based battery technology company Faradion

06.02.2014

Haldor Topsoe A/S, a global market leader in catalysis and related process technologies, has recently acquired 18% of the shares in the battery technology company Faradion Limited based in Sheffield Yorkshire, UK. As part of the investment, Haldor Topsoe will collaborate with Faradion to further co-develop and scale up key parts of the company’s sodium-ion technology. Furthermore, the investment provides Haldor Topsoe the right to manufacture and sell cathode materials for sodium-ion batteries under license from Faradion.

The investment marks the first ever equity investment aimed at broadening Haldor Topsoe’s technology portfolio and is closely linked to the company’s growth strategy ‘30 in 25’ that outlines how it plans to reach revenues of DKK 30 billion in 2025 based on its current strengths and R&D potential. According to Bjerne S. Clausen, CEO in Haldor Topsoe, it also marks the beginning of a more proactive and investigative approach to partnering and acquiring technologies.

“New technologies and business models that leverage our R&D position in catalysis play a key role in reaching our growth objectives, and in this regard we have identified battery materials as an important focus area with a clear strategic fit as well as a large addressable market and revenue opportunity,” says Bjerne S. Clausen.

Faradion was founded in 2010 with the objective to develop a low-cost, sodium-ion battery technology capable of reducing the cost of energy storage in a range of applications related to renewable energy, stationary storage, and transportation. Over the last few years, interest in sodium-ion batteries has increased. However, relatively little research has been conducted in this area and, as a result, next generation materials have not yet been brought to market.

Sodium-ion (Na-ion) batteries represent a potential direct replacement for some lithium-ion (Li-ion) batteries, allowing current Li-ion battery manufacturers to use existing equipment to construct batteries using next-generation Na-ion materials. Over the last three years, Faradion has filed twelve patent applications covering various aspects of its proprietary technology platform, and the company is headed up by a management team with a second-to-none track record in the scientific and business related aspects of commercializing new battery technologies.

Faradion’s technology is promising because it enables the replacement of lithium in lithium-ion batteries with the more commonly available, sustainable, and much less expensive metal sodium without impacting adversely on any of the key performance characteristics of current large scale batteries. From a cost point of view this makes it highly interesting in wide range of industrial applications.

As a result of increased demand, especially from the automotive industry and for stationary power storage, industry analysts expect that the total battery market will increase significantly in the years to come. The majority of this demand will be met by various kinds of new cathode materials currently under development.

“The collaboration with Faradion is an excellent opportunity for Haldor Topsoe. As Faradion’s technologies mature they will need an industrial partner capable of scaling up production of their next-generation battery materials. Becoming this partner provides us with the possibility to accelerate access to a growing market with a product based on a disruptive technology,” says Ole A. Hansen, business development manager in Haldor Topsoe.

Haldor Topsoe is the second corporate investor to invest in Faradion. A leading multinational electronics and energy company invested in a minority stake in late 2012.

“The relationship with Haldor Topsoe provides us with a fast-track route to bring our materials to market in commercial quantities. Haldor Topsoe’s experience of large scale manufacturing of highly similar materials will enable the future users of our technology to secure high quality materials in commercial volumes at competitive prices,” says Chris Wright, CEO in Faradion Ltd.



NB: I believe Sharp were the other Corporate investor in Faradion that Topsoe refer to above.

I also note in today's FT that one of Faradion's other partners, Williams Advanced Engineering (WAE), has won funding from the government-sponsored Advanced Propulsion Centre (APC) competition to create an electric battery manufacturing facility in the UK.




All in all, and reading between the lines, Faradion appears to be advancing quite rapidly into an exciting UK company, a company that looks set to enter the rapidly evolving global trend for sustainable, advanced battery solutions. And surely a strong candidate for a future spinout or cash exit.

Of course the good thing about Mercia, is that Faradion is only one from a number of exciting, emerging stars!

[sharesoc] 17/4/2018 14:56

Mercia Technologies present at our growth company seminar on the 1st May in Birmingham. This may be of interest to shareholders and potential investors.

[sharesoc] 10/4/2018 14:31

Mercia Technologies present at our growth company seminar on the 1st May in Birmingham. This may be of interest to shareholders and potential investors.

[sharesoc] 04/4/2018 12:01

Mercia Technologies present at our growth company seminar on the 1st May in Birmingham.

[cheshire man] 22/3/2018 08:14

RNS Reach
22 March 2018

Mercia Technologies PLC
("Mercia" or the "Group")

New Direct Investment in Voxpopme



Mercia's investment of £1.0million into the Birmingham-based technology company gives the Group a direct equity holding of 12.3%. This capital follows on from an initial investment by Mercia's third party managed funds.

Voxpopme has scaled quickly, growing to 38 people with offices in Birmingham, Salt Lake City, Sydney and London, and this funding will support its further ambitious international growth plans, particularly in the US.

[p1nkfish] 04/3/2018 17:58

Yes, agree, good to liquidate that holding as not a performer. Hopefully not indicative of MERC selection criteria outcome in general. As first exit theres no way to know yet.

[spectoacc] 03/3/2018 07:57

Agree with both. It's very poor considering the multiples they're looking for, but good in terms of exiting something that was underperforming at a price marginally above carry. At least the money can recycle elsewhere now.

[wan] 03/3/2018 05:09

All things considered, perhaps it's better than it first looks. From the Results -
year ended 31 March 2017


As at 31 March 2017, the Group held a 62.6% interest in Science Warehouse at a fair value of GBP9.9million. At Mercia's 30 September 2016 half year, the Group revalued its holding in Science Warehouse to GBP9.9million (2016: GBP12.7million) as a result of a review of peer group comparable company valuation multiples and an increasingly competitive marketplace. This fair value reduction represented a 25% provision against Mercia's equity value. No new investment was made during the year and the valuation as at 31 March 2017 remains unchanged.
(END)


On the face of it then, £10.5m in the bank looks shrewd, especially if growth has plateaued and other opportunities are presenting, onward and upward!

[p1nkfish] 02/3/2018 21:55

Science Warehouse exit looks weak to me given what Marcia is all about.
14,2% since 2014. Poor when annualised. Granted they did put all the money in at once.
Only hope they can use the money to gain higher returns elsewhere.

"It has been snapped up by Advanced Business Software and Solutions for a total cash consideration of £16.9m. Mercia will receive proceeds of £10.5m and will recognise an immediate realised gain of £600,000 compared with the holding value of £9.9m as at 30 September 2017. The sale represents a return to Mercia of 14.2% on its total investment cost of £9.2m."

[davidosh] 25/2/2018 19:57

Just to mention that Mercia will have a stand and be presenting at our huge Mello2018 event in Derby on 26th April and all shareholders and potential investors are welcome to attend

Mercia have never attended or presented at a Mello event before and we are very pleased to welcome them so this is an ideal opportunity to meet the management and hear about their strategy.

Do come and join us at this quality two day event and there will be at least 45 other companies to meet each day plus some fabulous keynote speakers.

[srichardson8] 31/1/2018 19:20

They told me current NAV was 56p but this was in the public sphere. I am always cautious on NAVs for companies holding unquoted securities as the valuation methods are opaque. How do they treat intangibles? But they do hold a lot of cash as well, both on the balance sheet (for direct investments) and in the managed funds. I have failed to get to grips with this NAV calculation today so am not considering buying until I do. Perhaps the fund management operation might be worth £7mn? I also noticed that Concepta, one of the (I think) two listed companies held as assets in the balance sheet, has not been stellar since listing though is just above the price of the December fund-raising in which Mercia topped up their holding. They own 18% but this is only one of roughly 20 direct investments and should be worth about £1.8mn of the pot which they valued at £65mn at end September - this is obviously bigger now on their valuation. What I did like about the company was
the aggregate growth of the managed funds (now £350mn after the $100mn investment
from the two Northern Powerhouse Funds). Some really excellent institutions are in
the fact that this increase guarantees higher management fee revenues
the apparent high quality of the men who were at the presentation
It feels like a safe l-t investment though clearly unquoted fund holdings will tend to do badly in a major market downturn or recession, will they not?
Perhaps one for the grandkids?
Any comments, obvious errors here?

[redartbmud] 31/1/2018 10:14

"Set in the context that Mercia operates a long-term investment philosophy, by combining third-party managed funds with selective scale-up capital directly from its balance sheet, all parts of the Group are in a growth phase and so it is pleasing to see an increase in post-tax profits to £1.4million and Net Asset Value ("NAV") per share increase to 41.1pence.

Spot on. I don't see how they can make that statement. You can only reiterate information that is not price sensitive ie. already reported to the market. That seems like an error to me.

[fredfishcake] 31/1/2018 09:55

MERC were at the Growth and Innovation meeting yesterday and flagged that they had a current NAV of 76p. He said that was in the public domain, but all I see in the half year results is "NAV per share grew 7.9% to 41.1 pence (H1 2016: 38.1 pence)." Not sure what to believe; as the results are from Dec the 76p seems unlikely....

[p1nkfish] 14/1/2018 09:42

I hold MERC and PHD.

Take a quick look at PHD thread. Sci Warehouse looks very tempting as PHD target.
Would be no surprise to see some activity there, MERC hold 62%.

Sci Warehouse look a little out of place now in the MERC portfolio, at least to me, and hard to see where they go from here as they don't have big scale in their rapidly consolidating market place. Offloading to PHD is not out of the question and needn't be bad for all concerned.

Both in Leeds. PHD scaling up, profitable, and looking for around £20M extra acquired revenue by 2021.

Sci Warehouse looks tasty. See Progressive Equity report on PHD to get the idea.

Current revenue about £68M for PHD, Sci Warehose probably £4M - £5M and although they can grow its only a matter of time before they are taken out or wither.

Just imho. Next market downturn might see some activity here.

[turbocharge] 10/1/2018 15:25

The buying today seems to support my last post. 50p looks imminent...

[turbocharge] 09/1/2018 13:41

Going by the chart history, looks like there is more to come

[cheshire man] 09/1/2018 12:08

Nice move up today I see :-)

[aishah] 08/1/2018 18:12

Up around 30% in the last two months. Techinvest says "continue to buy"

[cheshire man] 05/1/2018 13:29

Thanks for that purble,,,,some interest to start the year :-)

[purple11] 05/1/2018 07:43

Mercia Technologies (MERC)

36.25p

Technology businesses developer and fund manager Mercia Technologies (MERC) has built up an attractive portfolio of technology companies and has plenty of cash in the bank, thanks to the dilutive £40 million fundraising at the beginning of 2017.

That cash is being invested and it enables Mercia to take larger stakes in its investee companies. Mercia has invested £3.5 million in Manchester-based website traffic software developer Intechnica. The TrafficDefender software can remove unwanted traffic from bots and Mercia had previously made a small initial investment.

A further £2.5 million has been put in drug delivery patch developer Medherant. Mercia has secured a partnership with Edinburgh University and this should provide further life sciences opportunities.

Mercia's investment focus is on software, digital, electronics/engineering and life sciences and 99% of the value of the investment portfolio is accounted for by 18 investments.

Additional fund management mandates will increase income so that it will cover a majority of group costs. This means that more of the cash raised can be invested rather than used to cover operating costs.

The NAV was 41.1p a share at the end of September 2017, including cash of 16p a share, although some of this has since been invested. The discount to NAV is 12%. Rivals, such as IP Group and Frontier IP, are trading at a premium to assets. This is a good time to buy the shares. Existing investments are maturing and cash still has to be put to work

[aishah] 02/1/2018 11:49

Five AIM share tips for 2018 - MERC one of them:

hxxp://www.i i i.co.uk/articles/470969/five-aim-share-tips-2018

[mctmct] 02/1/2018 11:00

Has there been a recent broker upgrade? It looks that way on Stockopedia.

[p1nkfish] 19/12/2017 22:19

Alternatively look at the CAGR on the share price needed over 2 years for them to get a pay out.
I think they will reach for it and PI's likely to benefit.