Assets worth several trillions of pounds are managed by London’s exchange-traded investors. Their goal is to provide financial security to clients by increasing and maintaining the value of their capital.
Large managers such as Legal & General, Aberdeen, M&G, and Schroders tend to provide access to a wide range of asset classes and regions, handle the biggest missions and focus on mainstream markets.
Small players offer unique investment approaches for diversification and niche and specialist options. It often deals with wealthy individuals who pique their impact investments and risks, or those with a tax burden appropriate to ease venture capital trust and enterprise investment schemes. These allow investors to earn tax credits in exchange for providing capital to young UK companies.
Among these small managers is polar capital, which includes technology, scientific and financial funds. Foresight specializes in infrastructure and private equity opportunities that help tackle climate change. A clue about what sets Mercia Asset Management apart is the name of Northern, the VCT range.
This manager likes to show off London and southeastern England and find opportunities in local towns and cities. 80% of investment activity is outside of southeastern England.
Investing in niche areas and cutting-edge small businesses is not without risk. While there is demand for distinction and diversification markets from a strategy and process perspective, good performance is essential to maintaining fund flow and management fees.
Purchase: Mercia Asset Management (Merc)
The inflow accelerated in the final quarter, wrote Mark Robinson.
Mercia Asset Management returned to Black at the end of March as specialist asset managers increased their cash margins. Performance was supported by economies of scale and was demonstrated by a rise of 390 basis points on the adjusted margin to 22.1%.
As it was outlined a year ago, it is too early to determine whether this would prove “Mercia27,” a 100% growth target. However, it would not be fantasy to suggest that the fund management business is currently underway and Mercia is already moving forward to reaching its £10 million EBITDA target by 2027.
The group recognized a fair value loss of £300,000 over the period, against a profit of £4.5 million in the previous year, although it was significantly strengthened with regard to unrealized assets. In contrast to many industry peers, Mercia increased its management team (FUM) to £1.8 billion on an organic basis, with no redemptions recorded. Venture Femme rose 1.6% to £928 million.
Meanwhile, the fair value valuation of the direct investment portfolio was £126 million versus the previous £117 million. Executives are planning to offload approximately 70% of these direct investments over the next few years, so exit activity is set to rise in the short term. Some delegations are moving into the realisation stage within their equity and debt financing operations.
The majority of inflows were recorded in the final quarter of the fiscal year. They reflect both existing orders and new fund management agreements. Additionally, during this period, we successfully raised venture capital trusts and enterprise investment schemes. Given the timing, it is unlikely that these figures fully reflect the relevant effects of inflows on revenue.
Mercia’s ability to rejig the focus of business is supported by an uninterrupted balance sheet. Following the end of the period, many funding rounds have been completed. The group has liabilities and left the full year of 2025 with £39.3 million in net cash. This provided a 5% increase in the proposed final dividend and an launch of an annual share buyback policy of up to £3.0 million.
It’s a niche offering for investors: venture capital funds, private equity, and debt financing for UK small and medium-sized enterprises in high-growth regions. As a result, sell-side compensation is limited, but Mercia trades at a 45% discount on the consensus target price, with 23% trading against net worth, resulting in a price/book ratio of 0.7 times. We argue that Mercia is undervalued or perhaps unfairly overlooked.
Purchase: Curry’s (Curry)
Valeria Martinez says that e-retailers’ turnaround strategies are rewarded despite ongoing cost pressures.
Curries shows why it was a right call to oppose Elliot Management’s acquisition approach last year. Once a dense retailer is turning corner, and CEO Alex Bardock’s turnaround plans have begun to be delivered. A sharp rise in free cash flow and profits allowed the group to revive its dividends after a two-year break.
The company still deals with cost pressures, from high inflation to rising national insurance contributions, but so far has done a decent job of managing them. From last fall budget, annual costs are expected to be an additional £32 million, but Curries is expected to cut its central costs and offset this with business automation and offshoring.
Helpful, demand was resilient despite a wider economic background. Sales like the UK and Ireland increased 4% per year until May 3, with operating profit increasing by 8% to £153 million. The margin was stable at 2.9%.
The growing focus of curry is a more profitable revenue stream, including credit, repairs and connection services. These so-called “solution” sales do not rely on one-time product purchases and tend to provide better margins. Revenue from these regions increased 9% last year to £814 million, with Panmure Liberum currently estimated to account for 28% of UK and Ireland’s revenue.
Net cash was £184 million at the end of the year, excluding leases and pensions. Considering the £103 million pension deficit, the net position is currently £81 million, with Panmure Liberum analyst Wayne Brown saying it is £901 million more than six years ago. “The outlook for a buyback this year is very realistic,” he said, but he said it is likely that they will depend on the results of the pension triennale review scheduled for later this year.
Stocks have grown more than 70% over the past year, but are still trading at 11.4 times the forward revenue. This is well below the average of 31.7 times over five years.
Hold: wynnstay (wyn)
Julian Hoffman writes that farm gate prices support the provisional agricultural suppliers.
Excellent farm gate prices for all produce this year means a decent profit harvest for suppliers to the industry. Feed and equipment supplier Wynnstay enjoyed the benefits and reported the same amount of profit it managed throughout the last year.
The six-month result is the highest point in the company’s annual working capital cycle, as it usually stocks up products ahead of the spring planting season. This meant that the company’s business segment actually reflected the whims of the previous season.
For example, feed and grain revenues more than doubled to 900,000 pounds, but grain trade fell 13% as poor harvests in 2024 passed the supply system. In the meantime, the company has sold Twyford Mill and outsourced the milling for poultry feed.
Arable’s profit tripled to £1.4 million on the back of better fertilizer prices and favorable spring planting conditions. Meanwhile, the company’s 51-store network has remained stable in both footsteps and margins, earning a high profit of £3.1 million.
The company is in the middle of Project Genesis. This is a plan to simplify the business, consistently improve capital returns across the group, and invest in places where supply is constrained. Wynnstay’s investment in Avonmouth’s new fertilizer facility is part of this strategy.
Wynnstay’s stock began to recover after a rocky few years. This year’s price/return rate of 13.6 reflects its progressive restructuring. However, we will continue to be cautious until there is evidence of improved margins.
