RE: Sarissa Biomedical raises £1.2m7 Jun 2020 16:21
johnht/Boards
If you go to the Mercia site (or wealth club who also sell Merc schemes) and look at the application form you see that each investor is issued shares at a fundraisising round, which Merc charge the investor an annual management fee and a custody fee, they do not get free shares issued because they have invested. Can you imagine BBB dishing out free shares to Merc ? Their fees are not cheap to investors, tbh managing EIS co's requires a lot of time over not a lot of money, which I guess is why they bought out Northern VCT group
Investee companies often have several fund raises from start up to either liquidation, industry sale or flotation so it is at a later stage that Merc would usually choose to participate, eg Oxford Genetics (Oxgene) they chose to invest at a price of about 8 times more than their earliest investors paid some years earlier. Remember that a company does not receive the significant tax benefits a PI is entitled to. To be able to buy into a company which is showing promise is clearly different to buying into a start up or very early stage co. Also even in these start ups there are often more than just Merc investing, other VC companies can participate. So no dilution without payment can occur. Same way as VCT trusts operate, in broad terms.
Boards
You are totally correct as to NAV calculations being tricky, normally this is at last fund raise price less, for instance, an amount for post fund raise events, like covid or a big contract gained or lost, so essentially it is a wet finger in the air to see which way the wind is blowing. I think I am correct in saying that their only holding which is listed is/was blue prism, a real winner, but sadly Merc did not directly invest in it, they merged with a similar co who had Prism as an investment.
I know this is a long winded answer but they were involved questions !
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