Mercia Asset Management said it agreed to acquire the venture capital trust (VCT) fund management business of Newcastle-based NVM Private Equity LLP for up to £25 million.
Mercia is a regionally focused specialist asset manager providing capital to high-growth SMEs in the Midlands, the North of England and Scotland.
The VCT fund management business of NVM includes Northern Venture Trust PLC, Northern 2 PLC VCT and Northern 3 PLC VCT — which consist of 60 portfolio companies, with 17 listed, 27 private venture and 16 private equity.
NVM VCT Funds represent £270 million in assets under management which would increase Mercia’s total AuM by over 50% to £770 million.
Partly funded by a £30 million share placing, this would be Mercia’s second acquisition in the North of England, having acquired specialist fund manager Enterprise Ventures Group in 2016.
NVM chair Tim Levett said: “Since founding NVM with Alastair Conn and Michael Denny in Newcastle upon Tyne over 30 years ago, NVM has always focused on regional investment and has grown from managing less than £20 million to over £400 million now.
“Mercia’s history is very similar and we believe we are a great fit and are sure that the NVM venture team will thrive and benefit hugely from the deal flow and infrastructure in Mercia.
“Charlie and I are passionate about building value for our shareholders and look forward to working with Mark Payton and the team at Mercia to ensure we combine the best of both groups.”
Mercia CEO Mark Payton said: “We identified the Northern VCTs and NVM as the perfect fit for Mercia.
“This is an exceptional opportunity for Mercia, the transferring employees, the VCTs and the UK regions.
“This moves Mercia significantly closer to achieving our strategic milestone of managing £1.0 billion in AuM by 2022 and makes us a profitable and valuable active asset manager.
“As a domestic UK-only investor providing substantial support alongside capital deployment, we’ve long recognised this need for ambitious SMEs in the UK regions outside of London.
“This acquisition demonstrates our long-term commitment to the regions, as well as being a testament to the success of our propriety complete connected capital model that makes Mercia the first choice for investors, investees and employees.”