Record year for fundraising, cash better than expected

Mercia has released a year end trading update bringing the curtain down on a record year for fundraising after successfully securing £0.5bn new AuM as well as driving the portfolio forward in challenging conditions. It confirms that the balance sheet cash position was better than expected at c.£47m (SCMe £41m). Overall, starting FY25e in strong shape. We make no changes to our estimates having recently updated outer years, whilst FY24e performance remains in line. We await further detail on the

Very encouraging trading update

Further BBB mandate wins, forecasts upgraded

Hitting sixes: £150m Northern Powerhouse wins

Mercia has delivered further success, winning £150m mandates in the Northern Powerhouse (“NPIF II”) element of the British Business Bank’s (“BBB”) “Nations and Regions” programme. Alongside recent Midlands Engine wins, this takes the total to £360m a resounding endorsement from the BBB. We leave our FY24e forecasts unchanged with only days remaining, and upgrade our FY25e forecasts by 8%. There is significant value dislocation in the current share price with >£100m value being discounted despite

Successful VCT fundraise and syndicated investments

In the last 24 hours, Mercia has announced a successful £60m fund raise into its Northern VCTs alongside participation into three syndicated investment rounds for on-balance sheet investees. Both validate the potential value creation from existing portfolio investments and Mercia’s ability to originate and support attractive new opportunities; made all the more impressive given these transactions have been completed against a more challenging backdrop for fundraising. Following success in the re

£207m British Business Bank wins in the Midlands

Mercia has achieved a resounding success securing £207m new FuM across three debt and equity mandates as part of the British Business Bank’s Midlands Engine fund (“MEIF II”). The success further validates Mercia’s established regional presence, as well as the rationale behind the Frontier acquisition which enabled participation in the debt fund. Although the outcome is not yet known, Mercia has further bids in play for the Northern Powerhouse fund (“NPIF II”), expected to be announced by the end

Strong endorsement from the British Business Bank

Interims in line plus nDreams sale and share buyback

Mercia has delivered a positive set of interims in line with our expectations. Underlying performance is strong, reflecting continued organic growth and a full period contribution from fully integrated FDC. Net asset value metrics were unchanged with a small fair value reduction (£1.6m) despite continued positive progress. Post-period end, Mercia realised nDreams generating £26m cash; part of this is being returned via a £5m share buyback, complementing the interim dividend (+6%). We leave earni

H1'24 results: strength of the model evident

The BIG one: exit from nDreams crystallises success

Mercia has exited nDreams the largest direct balance sheet investment at an 18% premium to last carrying value and doubling our forecast cash on the balance sheet to ~£60m. This is a resounding validation of Mercia’s investment process and valuation basis. Mercia now has ~65% of the current market cap in cash, which makes the punitive 55% discount incredibly brutal (or by another metric, a mere ~£35m EV). A simple SOTP on the cash, remaining portfolio (both at book) and £6m recurring asset manag

Attractive exit of nDreams

Significant endorsement

Strong FY23 results

Morning Note – 22 April 2024

Benefits of scale set to materialise

Frenkel Topping - Resilient with strong growth potential

FY 2023 was a challenging year for Frenkel with higher interest rates encouraging clients to place money into lower margin money market funds. Despite this, sales grew +32% (supported by recurring revenue +9% and +51% in non-recurring), EBIT margins remained strong at 22% and adj. EPS grew +17% (taking into account the higher number of shares). FY 2024 has seen a solid start to transactional business and there is a strong pipeline of new FUM opportunities both of which support further growth. Wi

S&U - PBT ahead, encouraging volume trends

S&U reported FY24 PBT of £33.6m, down from £41.4m in FY23 on higher funding and regulatory costs and higher impairments in Advantage in H2. PBT was 2% ahead of our forecast as stronger revenues – up 12% to £115.4m – and better costs offset higher-than-expected impairments. Net receivables grew to a record at both Advantage and Aspen and management noted particular strength in Q4 and a good trading environment in the current year. Having absorbed a significant rise in funding cost as well as addi

Hardman & Co Insight: 2023 was an annus horribilis for Quoted UK Infrastructure and Renewable Energy

The focus of Hardman & Co Research is on the nine quoted Infrastructure Investment Companies (IICs) and on the 22 Renewable Energy Infrastructure Funds (REIFs): the stocks analysed are all members of the Association of Investment Companies (AIC). We are updating our publication of January 2023, assessing both the lacklustre share price performances during 2023 and the key issues, including interest rates, inflation and power prices. As a 31-strong group, its combined market capitalisation is no

Foresight Solar Fund - Termination of coverage

Edison Investment Research is terminating coverage on ABC Arbitrage (ABCA), paragon (PGN), Foresight Solar Fund (FSFL), Kendrion (KENDR), Lithium Power International (LPI), Triple Point Energy Transition (TENT), 4iG (4IG), e-therapeutics (ETX), Pharnext (ALPHA) and Shield Therapeutics (STX). Please note you should no longer rely on any previous research or estimates for this company. All forecasts should now be considered redundant. Previously published reports can still be accessed via our web

LIBERUM: PayPoint: On track for £100m of EBITDA in FY 26

Regional REIT - Performing as expected ahead of refinancing

In a challenging market, Regional REIT’s (RGL’s) FY23 operational and financial performance was robust, in line with expectations and previous guidance. Investor focus remains on the company’s loan to value (LTV) reduction and bond refinancing plans, explored in detail in our previous note and RGL will provide an update on this in due course.

Hybridan Small Cap Feast - 22 April 2024

22nd April 2024 * A corporate client of Hybridan LLP ** Arranged by type of listing and date of announcement *** Alphabetically arranged **** Potential means Intention to Float (ITF) has been announced Dish of the day Admissions: Delistings: What’s baking in the oven? ** Potential**** Initial Public Offerings: Reverse Takeovers: 16 April 2024: Electric Guitar (ELEG.L) Concurrent with its Admission to trading on AIM, Electric Guitar is proposing to acquire the entire issued share capital of 3radi

LIBERUM: Speedy Hire: Weakness in FY 24 but recovery in FY 25

The Hardman & Co Monthly: April 2024

Feature article: Steady as she goes, but could be better: A review of investment company liquidity since 2016 Liquidity is the lifeblood of equity markets. The measurement of liquid asset availability to a market or company is a way of gauging a market’s health. This article builds on our previous work, which analysed the liquidity data for non-financial trading companies, by applying the same analytical techniques to the investment companies (IC) space. We analyse liquidity for ICs as a whol

Foxtons Group (FOXT LN) - 1Q24 IMS shows real momentum

Foxtons Group plc first quarter revenue rose 9% to £35.7m (1Q23: £32.9m) with growth delivered across all business segments. Trading is in line with management's expectations.

Morning Note – 29 February 2024

Jupiter Green

Hardman & Co Insight - Asset managers had a poor 2022

Asset managers had a poor 2022: the S&P Composite 1500 Asset Management Index was down 22% and, according to the Investment Company Institute (ICI), worldwide mutual funds fell by 20%, from $76tr to $60tr. When bond and equity markets fall, the results are unlikely to be pretty: with revenues trending down and multiples contracting, there is a double whammy to contend with. So how do valuations shape up now, after a bullish start to the new year? The first chart is my favourite chart of asset m