THE NORTHERN VCTS EXIT GENTRONIX

9 SEPTEMBER 2024

NORTHERN 3 VCT PLC

THE NORTHERN VCTS EXIT GENTRONIX

Northern 3 VCT PLC (“the Company”) is a Venture Capital Trust (“VCT”) launched in 2001 and managed by Mercia Fund Management Limited. The Company’s objective is to provide long-term tax-free returns to investors through a combination of dividend yield and capital growth, by investing in a portfolio of investments mainly comprising unquoted venture capital holdings. In order to maintain approval by HM Revenue & Customs as a VCT, the Company is required to comply on a continuing basis with the provisions of Section 274 of the Income Tax Act 2007.

Gentronix, the UK-based contract research organisation (CRO) that is a world leader in genetic toxicology, has been acquired by Scantox Group of Denmark for an undisclosed sum.

The deal provides an exit for Mercia Ventures’ Northern VCTs, which have sold their stakes in the business for a combined £14.8 million, representing a 4.5x lifetime return on investment. Northern 3 VCT PLC received proceeds of £3.5 million. The benefit of the uplift in valuation received upon exit will be factored into the next Net Asset Value announcement.

Gentronix, which is based in Alderley Park in Cheshire, provides predictive toxicology services to the global pharma and chemical industry, enabling clients developing new drugs or products to identify genotoxic compounds at an early stage. The company also has expertise in ocular and skin sensitisation assays.

Founded in 1999 by Professor Richard Walmsley, Gentronix now employs almost 70 employees, having doubled its workforce since 2021. The company received the King’s Award for Enterprise in May this year after increasing its overseas earnings by 239% over three years, driving annual revenue to over £10m, with export sales accounting for 81% of that.

Following the acquisition, Gentronix will continue to operate under its current name and from its existing premises. The deal will give it access to new global opportunities while enabling Scantox to expand its services in response to client demands and provide a one-stop shop to support drug development in the lead up to human trials.

Matt Tate, CEO of Gentronix, said: “Becoming a part of Scantox Group is a fantastic next step for Gentronix, opening up unique possibilities for us to offer an even greater service portfolio to our clients. The scale-up journey at Gentronix has been strongly supported by Mercia and the Northern VCTs. Alex Gwyther and the team have been fantastic investment partners, working with us to develop a successful CRO that now has the opportunity to continue its growth within the Scantox group.”

The Northern VCTs first invested in Gentronix in 2007 and provided further funding over the years to support its ongoing growth.

Alex Gwyther of Mercia Ventures said: “This deal demonstrates the benefit of patient capital in building a world-class life sciences business. It has been rewarding to see Gentronix evolve and in recent years it has gained real momentum under the leadership of Matt and his team. The time is right for Gentronix to enter the next phase of its growth story and Scantox is an ideal partner. Bringing together these two businesses will create a leading global force in toxicology and pharmaceutical development.”

Following the acquisition, the Scantox Group will employ nearly 400 people across seven European sites offering lead optimisation, regulatory toxicology, CMC (chemistry, manufacturing and controls), formulation and analytical services. Scantox is owned by Impilo, the leading Nordic healthcare investment company.

Jeanet Løgsted, CEO of Scantox Group, adds: “I am thrilled that Scantox Group has been able to partner up with Gentronix. Genetic toxicology is a missing link in our portfolio and frequently requested by our clients to become a one-stop-shop premier CRO partner. Gentronix´s service line, client base, high quality standards and not least people culture fits perfectly with our DNA. Our business plan is to continuously expand our service portfolio across all sites and add scientific excellence to the Group.”

Enquiries:

Sarah Williams / James Sly, Mercia Fund Management Ltd – 0330 223 1430
Website: www.mercia.co.uk/vcts

The contents of the Mercia Asset Management PLC website and the contents of any website accessible from hyperlinks on the Mercia Asset Management PLC website (or any other website), are not incorporated into, nor forms part of, this announcement.