Mercia Asset Management sells The Native Antigen Company holding

Mercia Asset Management has announced the sale of The Native Antigen Company Limited (NAC) to LGC, a specialist in the life sciences tools sector, for a total cash consideration of up to GBP18.0million.

Mercia held a 29.4 per cent fully diluted direct holding in NAC at the date of sale and will receive initial cash proceeds of GBP4.8million, with up to a further GBP0.4million receivable upon finalisation of customary closing working capital calculations.

Based upon the total anticipated amount receivable of GBP5.2million, the total realised return above the GBP2.7million holding value as at 30 September 2019, will be a further GBP2.5million. Of this, GBP0.6million will be included as a fair value increase in the Group’s results for the year end ended 31 March 2020, which will be announced on 14 July 2020. The remaining balance of GBP1.9million will be recognised as a realised gain in the Group’s interim results for the six months to 30 September 2020.  
The sale is anticipated to generate an 8.4x return on its original direct investment cost and a 65 per cent internal rate of return (IRR).
Mercia first invested in NAC in 2011 through its third-party managed funds (which as at 31 March 2020 held an additional combined 20.9 per cent stake) and subsequently, from its own balance sheet as a direct investment in December 2014.
In addition to the direct investment returns, the sale will generate a 12.1x return on a blended third-party managed funds investment cost and a 31 per cent funds IRR. Mercia has proactively supported NAC since its first day of trading, including representation from Mercia’s Chief Operating Officer Peter Dines, as a non-executive director on the NAC board through to exit.
Founded in 2010, as a divestiture from a University of Birmingham spinout company, NAC has become one of the world’s leading suppliers of infectious disease reagents and is widely acknowledged to be a primary source of reagents for the study of emerging diseases.
Dr Mark Payton, Mercia Asset Management, CEO, says: “Keeping to our commitment of realising balance sheet investments within a three to seven year period from initial investment, NAC is the fourth full cash exit from our direct investment portfolio. It has been an excellent investment for Mercia and this sale is a strong demonstration of the value which our differentiated model can create; for investors in our managed funds, shareholders in Mercia and the founders we back. NAC is an example of an innovative regional business sourced through Mercia’s network, supported initially by our managed fund capital and then scaled using our own balance sheet capital.
“Mercia plays a critical role in helping the UK’s most exciting regional businesses scale and I am proud of the part we have played in NAC’s journey, not just as the major capital provider but also as a critical partner in helping the business achieve its potential. I look forward to watching as they continue to go from strength to strength with their new owner.”