As a regionally focused specialist asset manager, Mercia does not expect to experience the same highs and lows in valuations seen in more international growth markets. Mercia offers a defensible UK regional proposition, well aligned to the government’s levelling-up and SME agendas, with its venture portfolio supplemented by private equity and debt funds, investing across the digital media, software, life sciences and engineering sectors. With recurring fee income from FUM of £758m at 31 March 2022, Mercia has demonstrated that its model is sustainably profitable net of central costs. This allows management to offer a progressive dividend policy, with an FY22 dividend yield of 2.7%. Management’s strategy is to grow FUM organically, supplemented by M&A, further building recurring fee income. Mercia’s shares trade at a steep discount to NAV and on an FY22 P/E of just 5x.