Mercia Asset Management PLC (AIM:MERC) this week reported its interim results for the first half of the financial year, and chief executive Dr Mark Payton spoke to Proactive.
The company highlighted a significant increase in revenue to £17.9 million, with EBITDA up 34%, enabling a 6% rise in its interim dividend.
The company said its growth was driven by a focus on expanding third-party funds under management, which now stand at £1.6 billion. It added that its total assets under management, including direct investments and cash, amount to £1.8 billion, with a goal to reach £3 billion.
Here we take a closer look at what was said.
Proactive: Hello. You're watching Proactive. I'm joined by Mercia Asset Management CEO, Dr Mark Payton.
Mark, very good to speak with you this morning. You’re out with your first half results, and it looks like a positive continuation of last year.
Higher funds under management driving revenue and EBITDA growth. And Mark, this really has been a continuous journey for the past ten years.
Dr. Mark Payton: Yeah, absolutely, and these interim results really are a milestone to stop and reflect on what has been a ten-year journey as a listed business. We’ve achieved many accomplishments in that regard.
Over those ten years, we've invested approximately £1 billion across the UK, with about 90% of that outside London. We've supported 800 businesses and returned over £800 million to our fund investors.
This approach has been vital in creating the next wave of entrepreneurs and businesses. We feel privileged to be part of this growing ecosystem, which is supported by our 11 offices and around 140 team members.
Proactive: Mark, where do you continue to see value in UK investments?
Dr. Mark Payton: We break our strategy into three key areas: private equity, debt, and venture capital, which align with regional strengths. A key aspect is having a physical presence in the communities we serve.
Connectivity across our teams is crucial for scaling our operations. Asset managers often struggle with scalability, but we’ve focused on systems and frameworks that ensure connectivity and efficiency.
We've also developed two main platforms: deal origination and sales and distribution. These enable us to access the best opportunities and raise the necessary capital for them.
Proactive: Let’s touch on the period under review. Revenue is up strongly at £17.9 million, and EBITDA increased by 34%, underpinned by a 6% increase in your interim dividend. Can you share some more financial highlights?
Dr. Mark Payton: This growth stems from our strategic decision to prioritize third-party funds.
A decade ago, we managed £23 million in third-party funds; today, that figure stands at £1.6 billion. Including direct investments and cash, we are managing £1.8 billion in assets, and we’re on track to reach £3 billion.
Our diversified asset base includes retail investors, public sector mandates, and institutional capital.
Initiatives like the Mansion House Compact are reinforcing the importance of domestic and regional investment, which aligns perfectly with our place-based impact strategy.
Proactive: Can you explain the fund management movements over this period?
Dr. Mark Payton: Revenue growth during the period reflects our success in securing regional mandates and organic inflows of £57 million.
Unlike many asset managers, our funds are either evergreen or long-term, so we don’t face redemptions.
Instead, funds are only returned to investors upon positive exits. This consistent growth underscores our ability to scale through both organic and acquisitive means.
Proactive: You also noted that tax changes in the autumn budget won’t hamper your growth ambitions. Could you elaborate?
Dr. Mark Payton: The autumn budget clarified the extension of EIS and VCT schemes until 2035, which alleviated uncertainty.
These products are critical for attracting retail capital. While some sectors have faced challenges due to budget changes, our portfolio largely avoids these areas, focusing instead on businesses with strong growth potential.
Overall, we see more tailwinds than headwinds in the current environment.
Proactive: How’s the second half looking so far?
Dr. Mark Payton: The second half looks promising. We’re confident about meeting our forecasts, supported by a steady recovery following the autumn budget.
The quality of investment opportunities has significantly improved, which positions us well for continued growth.
Proactive: Well, Mark, I look forward to catching up again in another six months. Thank you for your time today.