Mercia’s venture capital trusts raise £60m as investors bulk up exposure to private businesses

Mercia Asset Management has raised £60m for three of its venture capital trusts focused on the North of England.

In September, the trusts launched a share offer for £42m, with an £18m overallotment option.

At the time, Nicholas Hyett, investment manager at Wealth Club, said the fundraise was due to the VCTs making a “raft of exits” from various holdings, bringing in over £154.6m in cash during the last two years.

The three Northern VCTs are Northern Venture Trust, Northern 2 VCT and Northern 3 VCT. Following an initial allotment in January 2024, they each expect to allot the remaining new shares around 4 April.

Mercia took control of the three trusts in 2019 from NVM Private Equity, which were the first VCTs that the firm had ever managed.

Mark Payton, CEO of Mercia, said, “I am delighted that the Northern VCTs have achieved significant fundraising in the context of a more challenging fundraising environment.

“The successful £60m fundraise underscores the trust Mercia has built in managing the Northern VCTs, which remain a vital source of investment for SMEs navigating the current economic climate.”

Last month, the firm, which manages around £1.5bn in assets, secured a £207m mandate from the British Business Bank to invest in the Midlands alongside its venture capital arm.

The new mandate was part of the larger Midlands Engine Investment Fund II (MEIF), a £400m initiative launched by the government-backed institution. It launched the Midlands Engine Investment Fund I in 2017 to much fanfare. The £300m fund supported more than 700 businesses and created over 4,000 jobs across the Midlands.

Of the total Mercia was given stewardship over, £44m will be debt lent to the West Midlands via Mercia’s Frontier Development Capital, and the remaining £163m will be equity invested into the region.

The funds are expected to be managed from Mercia’s offices in Birmingham, Nottingham, and Henley-in-Arden.