Mercia Asset Management pays £9.5M for SME lender Frontier Development Capital

By Nicky Godding

6 December 2022

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Warwickshire-based Mercia Asset Management PLC, has bought SME lender Frontier Development Capital Limited based in Birmingham, paying £9.5 million plus net cash. Mercia said this continues its "20:20 strategy of acquiring leading, regionally-based lenders to SMEs."

The acquisition adds around £415 million of funds under management.

Frontier has successfully built loan portfolios totalling around 100 companies, predominantly located across the Midlands and the North of England. As well as its Birmingham head office, FDC also has offices in Manchester and Bristol, two of Mercia's existing office locations.

FDC typically makes commercial loans from £2 million upwards, whilst Mercia's existing lending parameters are between around £200,000 and £1 million. Combined, Mercia's lending team will now comprise 41 staff managing around £531 million of funds under management, of which 28 are experienced, regionally based lending professionals.

Mark Payton, Chief Executive Officer of Mercia, said: "We're delighted to be able to announce the acquisition of Frontier Development Capital, which represents an important strategic milestone for Mercia, as we drive towards our '20:20' objectives. Sue Summers and her team have built an outstanding and highly regarded UK lender and the acquisition will bring complementary capital, capabilities and reach across the UK's regions, whilst also seeing our AuM grow to c.£1.4billion.

"Having worked closely with FDC over the past few months, during the due diligence and integration planning phases, we also know that we will be integrating a business with a culture that is aligned to our own, including an investment approach underpinned by partnership and a belief in the long-term potential to be found in the UK's regions. We welcome all FDC staff into #OneMercia and will be helping accelerate their growth through access to our networks, knowledge and broader footprint."

Sue Summers, Chief Executive of Frontier Development Capital, added: "Mercia has long been a business we've admired. Our shared passion for helping some of the UK's most exciting SMEs to thrive through supportive capital, makes Mercia the natural partner of choice as we look to continue the growth we have experienced since launching in 2016.

"Furthermore, Mercia's reputation and reach will be highly additive to both our future fundraising efforts and identification of potential lending opportunities. Mercia has established itself as a go-to provider of capital across the UK regions, and we're excited to be part of their vision to be the first choice for investors, investees and employees."

By Nicky Godding

Nicky Godding is editor of The Business Magazine. Before her journalism career, she worked mainly in public relations moving into writing when she was invited to launch Retail Watch, a publication covering retail and real estate across Europe.

After some years of constant travelling, she tucked away her passport and concentrated on business writing, co-founding a successful regional business magazine. She has interviewed some of the UK’s most successful entrepreneurs who have built multi-million-pound businesses and reported on many science and technology firsts.

She reports on the region’s thriving business economy from start-ups, family businesses and multi-million-pound corporations, to the professionals that support their growth and the institutions that educate the next generation of business leaders.