NVM sells VCT business for up to £25m

The offer price comprises an initial consideration of £16.6m, including £12.4m in cash and £4.2m in Mercia shares, with a three-year deferred contingent consideration of up to £8.4m. The price represents an entry multiple of 6.25x EBITDA.

Mercia approached NVM four to five months prior to the acquisition to enter discussions, NVM managing partner Martin Green said: "Being a VCT fund manager, there are constraints on how you can support portfolio companies, such as providing replacement capital. We felt it would be beneficial for the portfolio to have a more flexible manager that would be able to facilitate non-VCT qualifying follow-on investment."

The VCTs have around £270m in assets under management. They invested around £1-12m in young and growing companies, according to Green. NVM also manages institutional funds, including NVM Private Equity Vintage III, which closed on £142m in November 2018.

The NVM VCT management team, led by partners Tim Levett and Charlie Winward, will transfer to Mercia and will constitute a new VCT division within the Mercia group. In addition, NVM will continue to provide accounting, company secretarial and administration services to all three northern VCTs until at least September 2021.

Mercia also announced its intention to raise £30m to fund the initial cash consideration for the business and provide further growth capital for the division.

Around a year ago, fellow UK private equity player Livingbridge agreed to sell its VCT management business to Gresham House in order to focus on its core mid-market private equity activities.

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• Topics
• GPs
• UK / Ireland
• NVM Private Equity
• United Kingdom