Northern Venture Trust Regulatory News (NVT)

3 Dec 2019 07:04

Proposed change in management arrangements

3 DECEMBER 2019

NORTHERN VENTURE TRUST PLC (THE “COMPANY”)

Proposed change in management arrangements

NVM Private Equity LLP ("NVM") has today announced the conditional sale of its venture capital trust (“VCT”) fund management business (predominantly comprising three VCT fund management and advisory contracts relating to the Company, Northern 2 VCT PLC and Northern 3 VCT PLC (the “Northern VCTs”)), to a subsidiary of Mercia Asset Management PLC (AIM: MERC) (“Mercia”), a proactive, regionally focused specialist asset manager (the "Acquisition").

The Company has consented to the novation of its existing investment advisory agreement with NVM to Mercia, which is expected to become effective no later than 27 December 2019. No material changes are being made to the terms of the investment advisory agreement.

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. A comprehensive agreement has been entered into between NVM and Mercia to ensure the smooth transition and continuation of the management and administration of the Northern VCTs. NVM will continue to provide accounting, company secretarial and administration services to all three Northern VCTs until at least September 2021.

Mercia is an AIM quoted asset management group, focused on making early stage investments in the UK regions, both from managed funds and directly from its own balance sheet. Mercia has around £500 million of assets under management and the acquisition of the management of the Northern VCTs will increase Mercia's total assets under management by over 50% to approximately £770 million.

After careful consideration and extensive due diligence, the directors of the Company (“the “Board”) believe that the change in advisory arrangements is a positive development for the Company and that it comes at the right time in the continuing evolution of the VCT sector. Mercia and NVM believe that the combination of NVM’s long established position as a successful investor and Mercia’s venture credentials will create one of the leading regionally based UK venture fund management groups. The Board has identified that the specific benefits to the Company will include:

Deal flow - Mercia has the ability to introduce and complete many more deals each year and has a portfolio of over 300 companies. These are sourced both from regional networks and from universities. Enhanced regional presence and resource - Mercia has eight regional offices and 85 employees, with particular strengths in the Midlands, the North of England and Scotland. Mercia has invested heavily in building commercial expertise in a value added team which will be deployed both to help the Company’s existing portfolio companies and to identify new opportunities. Flexibility - Mercia’s management of non-VCT funds and its ability to make investments from its own balance sheet will facilitate non-VCT qualifying follow-on investment in existing portfolio companies where the Company is prevented by the VCT rules from investing further, opening up both acquisitions and management change investment which might not otherwise have been possible. Continuity - Tim Levett and Charlie Winward will continue to lead the VCT team and the Board is confident that the team will continue to build the Company’s portfolio. Mercia’s investment process is very similar to that developed over many years by NVM, and the procedure for undertaking due diligence and approving new investments will be substantially the same as before.

The Board considers that the change in management and advisory arrangements is a positive development for the Company, and looks forward to working with Mercia to achieve a good investment performance for shareholders in the future.

Tim Levett, Chairman, NVM Private Equity, Tel: 0118 951 7000

James Bryce, Company Secretary, Northern Venture Trust PLC, Tel: 0191 244 6000

Website: www.nvm.co.uk

Neither the contents of the NVM Private Equity LLP website nor the contents of any website accessible from hyperlinks on the NVM Private Equity LLP website (or any other website) is incorporated into, or forms part of, this announcement.