Mercia Tech sells emerging star Allinea Software for £18m

Investment firm Mercia Technologies has sold its emerging star software business, to ARM, a semiconductor intellectual property company, for £18.1m, which is 21 times the original investment.

The company sold Allinea Software, which develops tools for developing and optimising high performance computing applications and was one of the its emerging stars at the time of its original public offering in December 2014 after being spun out from the University of Warwick.

Allinea, whose software is used on about 70% of the world’s largest supercomputers, is the first emerging start divestment and represents a “substantial return” for the company.

The company will receive an initial £2.6m with a further £300,000 held in escrow for up to 18 months for closing capital calculations and potential warranty claims.

It said it will have a £700,000 immediate realised gain, compared to the value of £1.9m at 30 September. The company's invested cost is £1.5m, so the initial proceeds of £2.6m represents a 73% uplift.

It said that the sale demonstrated how “early-stage businesses can be effectively supported through Mercia's complete capital solution” programme, which is undertaken through its managed funds, by scaling the assets through direct investment which has the potential, to be bought by top-tier buyers.

Mecia chief executive, Dr Mark Payton, said: “The sale of Allinea to ARM is a testament to the value held within our investment portfolio and will enable Allinea to accelerate its development and reach within the growing high performance computing markets, as well as achieving greater exposure in adjacent segments such as machine learning.

“As a Midlands-based business, this is further evidence of the hidden value we are able to unearth from the UK regions and our university partnerships."

Shares in Mercia Technologies were down 0.48% to 50.01p at 0818 GMT.