Mercia Asset Management’s sale of Oxford Genetics Limited (OxGene) generates a return between 13x and 20x for five of its EIS Funds.
Mercia, who have £872m under management, sold OxGene for £30.7m – their largest cash sale to date.
Mercia won the EISA Best Exit award in 2020, for its exit of Native Antigen Company, returning 8.6x to their EIS investors, and 13x to their proof of concept fund. Back in November Dr Paul Mattick, Head of Investor Relations, told GBI Magazine Mercia were ‘focussed on exits’, and it’s clear they intend on realising this goal.
Mercia held a 32.1% direct holding in OxGene at the date of completion. The sale results in a realised gain of £14.6million above Oxgene’s £16.1million direct investment holding value as of 30 September 2020.
The sale has generated a 5x return on Mercia’s direct investment cost of £6.1million and a 51% internal rate of return (IRR).
Mercia first invested in OxGene in July 2013 through its third-party managed EIS funds and it subsequently became a direct investment in December 2015.
In addition to the direct investment return, the sale has generated returns of between 13x and 20x investment cost for five of Mercia’s EIS funds, generating fund IRRs of between 38% and 49%.
Mercia has proactively supported OxGene since its beginning, including representation throughout Oxgene’s board by Mercia’s Chief Executive Officer, Dr Mark Payton.
Dr Mark Payton, CEO of Mercia Asset Management PLC, said:
“OxGene is a great business and we are proud of the role Mercia has played, proactively supporting the team from its founding through to this landmark transaction, which will enable the business to continue its pioneering work. The sale of Mercia’s shareholding in OxGene demonstrates both the power of our regional networks and the strength of our unique Complete Connected Capital model. This exit therefore delivers an excellent result for Oxgene’s founders and employees, our shareholders and our third-party EIS fund investors.
“This event is also a significant milestone for Mercia as the exit proceeds now ‘evergreen’ our balance sheet; another of our key strategic objectives. The full cash sale of our second largest direct investment will enable the Group to support and expand its direct investment portfolio for the foreseeable future. We continue to believe that this diversified portfolio, in terms of sector and stage of development, offers further promise over the near to medium term.
“Finally, this transaction reaffirms the significant opportunity and value creation potential offered by Mercia’s ‘funds first’ hybrid investment model, focused on promising companies located outside of London and in what we term ‘The Thriving Regions’.”
Mercia will discuss the OxGene story in a webinar on the 9th March at 4pm – please register here.
Mercia seeded OxGene in 2013 and have supported the development of its technology to automate/simplify lab processes, speeding up the creation of large drug molecules such as Insulin. This area is very technical area and is a space that Mercia know well from their academic backgrounds. It’s also something they want to help explain, so sign up for their webinar to find out more.