Mercia updates market on substantial investments in gaming assets

The AIM-traded firm said that with around £1.4bn of assets under management (AuM), its investments in the sector accounted for around 33% of its direct investment portfolio value as at 30 September last year.

Additionally, the company said it was invested in several gaming businesses through its managed funds.

The board said the mobile and digital gaming sector held significant importance for Mercia due to the majority of the approximately 2,200 game development studios in the UK being small and medium-sized enterprises (SMEs).

That, the directors said, aligned with its investment criteria and sector expertise.

Additionally, it noted that the UK had a strong track record of producing innovative, rapidly-growing, and globally-successful gaming studios.

The sector provides employment for more than 47,000 individuals directly and indirectly, and the presence of tax relief for video game development in the UK also played a crucial role in attracting substantial investments to the sector.

Mercia noted that the global gaming market's value reached $184.4bn in 2022, adding that it was projected to experience a 5% annual growth rate, reaching $211bn by 2025.

The number of players worldwide was anticipated to reach 3.6 billion by the same year.

“The UK's gaming sector has established itself as one of our most exciting sectors, experiencing strong growth supported by compelling and secular global tailwinds,” said chief investment officer Julian Viggars.

“The UK already has several leading studios distributing their games worldwide and we expect this number to grow.

“The continuing success of Mercia's investments validates our focus on this sector and ability to identify and nurture promising companies.”

Viggars said that while the mobile sector showed a small slowdown in 2022, Mercia’s two mobile games businesses were both showing “outstanding growth” through investment in the quality of their content, together with clear user acquisition strategies.

“We are also seeing significant momentum in the VR market with 2023 promising to be a pivotal year as new hardware is released by a number of leading global tech firms, including most recently Apple's augmented reality headset.

“Looking ahead, we will continue to seek out and support gaming companies that demonstrate exceptional potential for growth and value creation.

“With a keen focus on the regions, Mercia remains committed to fostering innovation, driving economic growth, and delivering strong returns for its investors.”

At 1358 BST, shares in Mercia Asset Management were up 1.67% at 27.45p.

Reporting by Josh White for Sharecast.com.