Mercia Technologies PLC Acquisition of Enterprise Ventures Group Limited

Mercia is delighted to announce that it has acquired the entire issued share capital of Enterprise Ventures Group Limited, a leading provider of early stage and growth finance through third party managed funds in the North of England, for a total consideration of up to £11.0 million, plus net cash. The acquisition is expected to be immediately earnings enhancing. Enterprise Ventures has successfully built a portfolio of almost 150 equity investments, via its third party funds under management, in innovative companies spanning a range of sectors within Mercia's focus.

Mercia has developed a complete capital solution investment model of nurturing early stage businesses via its third party funds under management to create a funnel of future direct investment opportunities for Mercia (its "Emerging Stars"), by investing in, supporting and scaling innovative businesses in targeted technology sectors to deliver significant shareholder value. The Directors believe that the acquisition of Enterprise Ventures significantly accelerates Mercia's stated strategy of becoming a national technology investment business, with a local presence in the underserved regions of the Midlands, the North of England and Scotland, whilst greatly expanding Mercia's funnel of future Emerging Stars for direct investment.

This strategic acquisition is for an initial consideration of £9.0 million, comprising approximately £8.3 million satisfied in cash funded from existing resources and approximately £0.7 million to be satisfied by the issue of 1,645,711 new Mercia shares (the "Initial Consideration Shares"), and an amount equal to Enterprise Ventures' net cash position (subject to certain adjustments) at completion (estimated to be approximately £1.9 million). In addition, deferred consideration of up to £2.0 million, to be satisfied by the issue of new Mercia shares two years from completion at the then prevailing share price (the "Deferred Consideration Shares"), will be payable contingent upon future third party funds raised.

Enterprise Ventures was owned entirely by its senior management team, all of whom are remaining with the enlarged Group, including Chief Executive Jonathan Diggines, who joined the Board of Mercia as an Executive Director on completion. Further information on Mr. Diggines, as required by Schedule 2(g) and Schedule 4 of the AIM Rules for Companies is included within the appendix to this announcement.

Mark Payton, Chief Executive Officer of Mercia, commented: 

"This strategically-focused acquisition further scales Mercia's differentiated complete capital solution into the North of England, positioning the Group as the leading go-to investor in and supporter of great technology success stories in the Midlands, the North of England and Scotland.

"Enterprise Ventures brings a number of strategic benefits, having built a substantial portfolio of early stage third party investments which expands Mercia's funnel of potential future direct investments, together with a track record of supporting these investments through to successful exits. This combination will significantly increase our pipeline of direct investment opportunities, by more than tripling the total number of investments held within our third party funds now under management, and supporting over time the creation of significant incremental value for our shareholders.

"With the scale, geographic reach, access to capital and investment expertise that the enlarged business offers, this represents a significant step towards Mercia becoming the market leader for the funding and development of high growth innovative businesses within our chosen sectors and geographies."

Jonathan Diggines, Chief Executive of Enterprise Ventures, added:

"It was the natural choice for Enterprise Ventures to join the Mercia team thereby creating a market-leading position in funding and developing innovative British businesses, particularly in the underserved regions of the Midlands, the North of England and Scotland.

"Mercia is already at the forefront of providing funding and support to high growth, innovative companies. In joining together, we will not only be able to offer our existing Enterprise Ventures portfolio companies access to additional expertise and follow-on capital, but we will also strengthen our combined ability to support new businesses and technologies on their journey to success."