The £90.3m sale of nDreams, a Farnborough, UK-based UK virtual reality (VR) studio that specializes in developing and publishing VR games, to Stockholm-based Aonic AB, provided an exit for Mercia Asset Management.
Mercia Asset Management held a 33.2% direct stake in the company. It achieved a total return of £30.2m, consisting of £26.4m in cash and a £3.8m stake in Aonic, and representing a 2.7x return on investment and a 18.4% IRR.
Mercia was one of the first investors to anticipate the growth of VR. Its initial £0.3m investment in nDreams was made in March 2014, prior to Facebook’s acquisition of Oculus VR, which is regarded as a landmark deal in the industry. Mercia initially invested through its managed funds, later using capital from its own balance sheet.
Founded by Patrick O’Luanaigh in 2006, nDreams employs 250 people across four studios working on a range of high- potential projects. These include recent launches Ghostbusters: Rise of the Ghost Lord, in collaboration with Sony Pictures Virtual Reality and Meta, and the Meta Quest chart topper Powerwash Simulator VR.
Aonic, a diversified video gaming group with a consolidated position in the VR and augmented reality (AR) industry, made an initial $35m investment into nDreams in March 2022. This investment supported nDreams’ acquisition of Near Light Limited, a Brighton-based VR and AR game development studio, organic investment into new game developments as well as its broader growth strategy.
Commenting on the exit, Julian Viggars, CIO of Mercia Asset Management and nDreams’ board member, said: “When we first invested in nDreams we had a high conviction in the potential of VR gaming, and this realisation is a strong validation of that thesis. We have proactively supported nDreams since 2014 and are pleased that we will continue to benefit from their continuing growth as part of Aonic, through our partial reinvestment. We look forward to nDreams continuing on its exciting VR and AR journey within a larger gaming group and congratulate Patrick O’Luanaigh and his nDreams team on all that they have achieved thus far.“
Dr Mark Payton, CEO of Mercia Asset Management PLC, added: “This trade sale represents another profitable outcome for Mercia, realising a significant return which is above our current holding value, predominantly in cash. This latest successful exit further adds to our strong debt free cash position, which now stands at circa £60m. We look forward to announcing Mercia’s Interim Results on 28 November 2023.“