Mercia Asset Management acquires FDC

Henley-in-Arden based Mercia Asset Management has expanded with the acquisition of a regionally-based lender to SMEs in a deal worth up to £9.5 million.

Mercia has a strong tech portfolio including companies like Birmingham’s CyberOWL, and Warwick Acoustics, and also works with regional universities to identify investment opportunities

While Frontier Development Capital (FDC) has built loan portfolios totalling approximately 100 companies, predominantly located across the Midlands and the North of England.

FDC is headquartered in Birmingham and also has offices in Manchester and Bristol, two of Mercia’s existing office locations.

The purchase of FDC adds £415 million of funds under management to Mercia, whose lending team will now comprise 41 staff managing about £531 million.

Mark Payton, chief executive of Mercia, said: “Sue Summers and her team have built an outstanding and highly regarded UK lender and the acquisition will bring complementary capital, capabilities and reach across the UK’s regions, whilst also seeing our AuM grow to £1.4bn.

“Having worked closely with FDC over the past few months, during the due diligence and integration planning phases, we also know that we will be integrating a business with a culture that is aligned to our own, including an investment approach underpinned by partnership and a belief in the long-term potential to be found in the UK’s regions.”

Sue Summers, chief executive of Frontier Development Capital, added: “Mercia has long been a business we’ve admired. Our shared passion for helping some of the UK’s most exciting SMEs to thrive through supportive capital, makes Mercia the natural partner of choice as we look to continue the growth we have experienced since launching in 2016.

“Furthermore, Mercia’s reputation and reach will be highly additive to both our future fundraising efforts and identification of potential lending opportunities. Mercia has established itself as a go-to provider of capital across the UK regions, and we’re excited to be part of their vision to be the first choice for investors, investees and employees.”

The news of the acquisition coincides with Warwickshire-headquartered Mercia reporting a revenue of £12.1 million for the six months to 30 September 2022, up from £10 million, while pre-tax profits dipped from £10.9 million to £7.4 million.

Group assets under management went from £948.4 million to £979.4 million over the same period.