Mercia EIS Fund
Investment Objective
The Mercia EIS Fund is a diversified venture capital portfolio, wrapped within an EIS fund, which offers strong downside protection and the upside is not limited by capital gains tax.
We aim to triple invested capital in five to seven years, including tax reliefs. We will achieve this by investing at seed and early stage, expecting failures and targeting high multiple returns in some companies (10x or more).
The Mercia group is one of the largest (£800m) and most respected early-stage investors in the UK, and we currently have £300m to invest. We focus on investing outside of the South East of England, as we find much improved valuations, and we have a track record of exits (returning over £300m).
Exit Strategy
The Mercia group is focused on realising value.
The natural exit window in the UK is between £25m-£50m, and we invest at a seed or early-stage that enables Mercia to achieve the multiples required to deliver the portfolio level returns in 5-7 years.
There are two standard exit routes for EIS managers, exiting via
- Trade sale; Mercia has done circa 50, including a 26x in Allinea
- Stock market listings; Mercia has been involved in 11 IPOs, including BluePrism delivering 104x.
- Mercia can provide additional liquidity mechanism in some circumstances.
Mercia aims to exit companies in a valuation range of between £25m-£50m, which is the most common in the UK, but we have built big companies (BluePrism £1.8billion in Sept 2018). There are already rapidly growing companies in the EIS portfolio which could exit for over £50m, delivering an exit of over 25x cost, providing fund-level returns well in excess of our target.
Exit history
| Company | Date of exit | Share purchase price | Share exit prices | Total return (net of reliefs) |
|---|---|---|---|---|
| LM technologies | July 2016 | £0.66 | £3.18 | 4.8x (6.9x net) |
| BluePrism (EIS qualifying) | March 2019 (final) | Equivalent of £1 | Equivalent of £104 (blended) | 104x |
| Allinea (EIS invested) | 2017 | c£1 | c£26 | 26x |
| Milkalyser SEIS | Jan 2020 | £50 | £54.49 | 1.1x |
| Native Antigen Company | July 2020 | £408 | £3,512.42 | 8.6x (12.3x net) |
Fund Manager
Mercia Asset Management has £0.8billion AuM and is recognised as the leader in UK focused, early-stage technology investments.
Fees
| Fee | Investor (including VAT) | Investee Company |
|---|---|---|
| Initial fee | 1.2% | Variable, as negotiated with company (average 2.5%, but waived in many cases) |
| Annual fee | 2.1% (payable for six years) | n/a |
| Performance fee | 20% over £1 | n/a |
| Other fee information | 0.25% annual custodian fee (payable for six years), and 0.35% transaction fee | Board directors’ fees, as negotiated with company |
For further information please do not hesitate to contact us on:
+44 (0) 20 7952 6685
info@kuberventures.com
www.kuberventures.co.uk
Fund at a glance
Scheme Categorisation
Alternative Investment Fund
Target Return
Triple invested capital, including tax reliefs
Scheme Strategy
Venture capital EIS with leading UK technology investor
Investment Sector
Various technology sectors
Target Diversification
12-15 companies
Nominee & Custody Arrangements
Custodian: The Share Centre Limited Receiving Agent: Woodside Corporate Services Limited
Nominee: Share Nominee Limited