Mercia Asset Management PLC said it saw strong inflows into its business in its last financial year in spite of the economic uncertainty.
The fund manager acquired loan specialist Frontier Development Capital in December, adding £415mln to assets, but said even without that organic inflows had totalled £134mln.
Some £165mln was invested during the year into 176 businesses, including 85 new companies with funds under management (AuM) up 50% to £1.44bn at the March 2023 year-end.
Revenue at the management company rose by 11% to £25.9mln, with profits of £384,000 (£22.9mln), which it said reflected a much lower fair gain adjustment compared to the prior year.
Those lower gains highlighted the current challenges, said Mark Payton, chief executive, especially for its directly held portfolio.
Netacea experienced lower growth than forecast and, coupled with market revenue multiples falling, saw a £3.5mln fair value decrease
Intelligent Positioning and W2 Global Data Solutions both experienced similar pressures during the year while Edge Case Games saw a major customer shift its business model.
Investors have also become increasingly risk-averse and either scaled back or withdrew from assets struggling for growth or exhibiting high cash-burn rates.
Even so, Payton said Mercia is determined to deliver on its target 20% AuM growth for the three years to March 2024 and had increased levels of capital deployment, completed a successful acquisition and achieved positive fund inflows, with total AuM growing by c.50%.
“Mercia's hybrid investment model of an evergreen balance sheet with maturing assets, coupled to a highly synergistic and profitable fund management operation puts us in a strong position as we face FY24, with c.26% of our AuM in unrestricted cash including £37.8mln of our own cash reserves."
The final dividend rises by 6% to 0.53p with NAV at the year-end 45.4p (45.6p).