REG - Mercia Asset Mgt PLC - Publication of Annual Report and Notice of AGM

Mercia Asset ManagementAnnouncement

26/07/2024 07:00

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RNS Number : 9031X  Mercia Asset Management PLC  26 July 2024

 RNS   26 July 2024

 

Mercia Asset Management PLC

 

("Mercia", the "Company" or the "Group")

 

Publication of Annual Report and Notice of AGM

 

 

Mercia Asset Management PLC (AIM: MERC), the proactive regionally focused,
specialist alternative asset manager with c.£1.8billion of assets under
management ("AuM"), announces that it has published its Annual Report and
Accounts for the year ended 31 March 2024.

 

An electronic copy of the Annual Report and Accounts is now available on the
Company's website at www.mercia.co.uk/annual-report-2024/
(http://www.mercia.co.uk/annual-report-2024/)

 

Printed copies of the Annual Report and Accounts are being posted to
shareholders who have requested hard copies.

 

A Notice of Annual General Meeting ("AGM") for Mercia's 2024 AGM is included
in the Annual Report and Accounts. The AGM will take place on 26 September
2024 at 10:00 am at the offices of Rothschild & Co, New Court, St
Swithin's Lane, London, EC4N 8AL. All shareholders will be sent a hard copy
Form of Proxy for use in connection with the AGM.

 

The Notice of AGM includes information for shareholders (as summarised below)
regarding the Board's proposal, subject to the passing of an ordinary
resolution at the AGM, for the Company to be no longer classified as an
'Investing Company' under the AIM Rules.

 

- Ends -

 

For further information, please contact:

 Mercia Asset Management PLC                                 +44 (0)330 223 1430

 Mark Payton, Chief Executive Officer

 Martin Glanfield, Chief Financial Officer

 www.mercia.co.uk (http://www.mercia.co.uk/)

 Canaccord Genuity Limited (NOMAD and Joint Broker)          +44 (0)20 7523 8000
 Simon Bridges, Emma Gabriel

 Singer Capital Markets (Joint Broker)                       +44 (0)20 7496 3000
 Charles Leigh-Pemberton

 FTI Consulting                                                       +44 (0)20 3727 1051
 Tom Blackwell, Jenny Boyd
 mercia@fticonsulting.com (mailto:mercia@fticonsulting.com)

 

About Mercia Asset Management PLC

Mercia is a proactive, specialist alternative asset manager focused on
supporting regional SMEs to achieve their growth aspirations. Mercia provides
capital across its four asset classes of venture, debt, private equity and
proprietary capital: the Group's 'Complete Connected Capital'.

 

The Group has a strong UK footprint through its regional offices, university
partnerships and extensive personal networks, providing it with access to
high-quality deal flow.

 

Mercia Asset Management PLC is quoted on AIM with the EPIC "MERC".

 

Information on Mercia's proposed reclassification as a trading company

 

1.    Introduction

 

As announced in the Company's results for the year ended 31 March 2024,
released on 2 July 2024, as part of the Company's natural evolution in
strategy, the Board believes that Mercia's next phase should focus on growing
its third-party funds under management ("FuM"). The Group's intention
therefore is to no longer make new direct investments from its balance sheet.
The Group will continue to support its existing direct investments, but
anticipates that their number will reduce as these investments are realised.

 

In considering these proposed changes, the Board believes it is more
appropriate to characterise Mercia as a trading business, whose principal
business operation is one of asset management. As such, the Board is proposing
that the Company ceases to be an 'Investing Company' under the AIM Rules (the
"Reclassification").

 

The Board has today issued a Notice of AGM to shareholders, within its Annual
Report and Accounts, providing details of the background to and reasons for
the Reclassification and why the Board considers that their proposed new
strategic direction is the right one for all stakeholders. The Board therefore
unanimously recommends that shareholders vote in favour of resolution 15 in
the Notice of AGM that the Company ceases to be an 'Investing Company' under
the AIM Rules (the "Resolution").

 

2.    Background and reasons for the Reclassification

 

When Mercia was admitted to trading on the AIM in December 2014, it was
established as a proactive, specialist asset manager focused on supporting
regional small and medium-sized enterprises ("SMEs"), to achieve their growth
aspirations. Mercia provided capital across the four asset classes of balance
sheet, venture, private equity and debt: the Group's 'Complete Connected
Capital'. Mercia provided early-stage capital from its third-party managed
funds and for those young businesses showing good technical and commercial
promise, the Group subsequently provided development capital from its own
balance sheet to help scale up those businesses in line with its investment
policy. As such, under the AIM Rules, Mercia was treated as an Investing
Company. At that time, Mercia's net assets were c.£81million, considerably
greater than its c.£23million of FuM.

 

Since its admission to AIM, the Company has grown both its balance sheet and
its third-party FuM. As at 31 March 2024, Mercia had 22 direct investments
fair valued at £116.9million, net assets of £189.2million and had grown its
FuM significantly to c.£1.6billion. FuM now materially outweigh net assets,
the largest component of which is the direct investment portfolio.

 

Announced on 2 July 2024, as the Board looks to the future and refreshes its
three-year strategic plan, Mercia's intention is to focus much more on its
profitable and fast-growing FuM. The Company intends therefore to no longer
make new direct investments from its balance sheet. It will continue to
support existing direct investments where merited but anticipates that their
number will reduce as these investments are realised.

 

In considering these proposed changes, the Board believes it is now more
appropriate to characterise Mercia as a trading business, whose principal
business operation is one of asset management.

 

3.    Reclassification and future strategy

 

The Company is currently considered to be an Investing Company for the
purposes of the AIM Rules. As a result, it may benefit from certain partial
carve-outs to the AIM Rules, such as those in relation to the classification
of reverse takeovers (as defined in Rule 14 of the AIM Rules). Were the
Company to lose investing company status for any reason, such carve-outs would
cease to apply. The AIM Rules also impose requirements on the way in which an
Investing Company conducts its affairs, such as consideration of exposure to
risk through cross-holdings, thereby providing in this respect a degree of
inherent protection to investors in such companies. Shareholders should be
aware that such requirements of the AIM Rules would no longer apply to Mercia,
should the Company no longer be classified as an Investing Company.

 

Subject to shareholder approval at our Annual General Meeting in September
2024, the next three years sets Mercia on an evolutionary path to become a
leading UK specialist alternative asset manager, focused on impactful capital
deployment of third-party FuM in our target markets.

 

Subject to shareholder approval of the Reclassification, the Company will
cease to be regarded as an Investing Company for the purpose of the AIM Rules,
and it will cease to have a formal investing policy.

 

4.    Recommendation

 

As a Board, we unanimously believe that our proposed new strategic direction
is the right one for all stakeholders, be they our many longstanding fund
investors, our Venture Capital Trusts ("VCTs"), our employees and, critically,
our shareholders. If approved by our shareholders, Mercia's twin new strategic
objectives will be to increase AuM to more than £3.0billion whilst doubling
EBITDA during the next three years to 31 March 2027.

 

As above, the Board believes that the Reclassification is in the best
interests of the Company and the shareholders as a whole and unanimously
recommends that shareholders vote in favour of the Resolution to be proposed
at the AGM to be held on 26 September 2024 at 10:00 am.

 

The Directors intend to vote in favour, or procure the vote in favour, of the
Resolution at the Annual General Meeting in respect of their beneficial
holdings of Shares which, in aggregate, amount to 74,187,125 Ordinary Shares,
representing approximately 17 per cent of the Company's issued Ordinary Share
capital.

 

5.    Timetable

                                                                         2024
 Publication of Annual Report and Accounts containing the Notice of AGM  26 July
 Latest time and date for receipt of Forms of Proxy                      10:00 am 24 September
 Annual General Meeting                                                  26 September
 Effective date for reclassification                                     27 September

References to times are to times in London unless otherwise stated.

 

The above times and/or dates may be subject to change and, in the event of
such change, the revised times and/or dates will be notified to Shareholders
by an announcement through a Regulatory Information Service.

 

6.    Definitions

 

The following definitions apply throughout this announcement unless the
context otherwise requires:

 

  "AIM"                                                           the market of that name operated by the London Stock Exchange

  "AIM Rules"                                                     the rules published by the London Stock Exchange entitled "AIM Rules for
                                                                  Companies"

 "AIM Rules for Investing Companies"                              the rules published by the London Stock Exchange entitled "AIM Rules for
                                                                  Investing Companies"

  "Annual General Meeting"                                        the annual general meeting or "AGM" of the Company to be held at 10:00 am on
                                                                  26 September 2024, or any adjournment thereof, for the purpose of considering
                                                                  and, if thought fit, passing the Resolutions

  "Board" or "Directors"                                          the board of directors of the Company, including a duly constituted committee
                                                                  thereof

  "Form of Proxy"                                                 the form of proxy for use by shareholders in connection with the AGM which has
                                                                  been sent in hard copy to shareholders

  "Group"                                                         the Company and its subsidiaries from time to time

  "Investing Company"                                             any AIM company (that is, a company with a class of securities admitted to
                                                                  AIM) which has as its primary business or objective, the investing of its
                                                                  funds in securities, businesses or assets of any description (as defined in
                                                                  the AIM Rules)

  "Investing Policy"                                              the policy that an Investing Company will follow in relation to asset
                                                                  allocation and risk diversification, as defined in detail in the AIM Rules

  "London Stock Exchange"                                         London Stock Exchange plc

  "Notice of AGM"                                                 the notice of the Annual General Meeting set out in the Annual Report

  "Ordinary Shares"                                               Ordinary shares of £0.00001 each issued by the Company

  "Resolution"                                                    Resolution 15 to be proposed at the AGM: that the Company ceases to be an
                                                                  'investing company' under the AIM Rules

 

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