Take profits on Quindell

Quindell Portfolio is to raise £26.5m to fund rapid growth in its insurance outsourcing business, but that's a cue to take some profits

November 2, 2012

by John Ficenec

Insurance and telecoms outsourcing consultant Quindell Portfolio (QPP) is set to raise £26.5m through a private placing of 203.8m shares at a price of 13p per share.

IC TIP: Hold at 13.25p

Chief executive Rob Terry says the placing "will provide Quindell with ample funding to deliver on its growth strategy". Mr Terry also told Investors Chronicle that Quindell has five outsourcing projects in pilot which he reckons will provide over £120m in revenue on each contract if signed. He added that advanced discussions on further debt and funding options could mean that Quindell will grow sufficiently fast that it will beat its target to generate EPS of 2p in 2013.

However, private investors will rightly feel a little peeved at being frozen out of the share offer, which will see their interests diluted by around 7 per cent. The shares have had a fantastic run, rising 83 per cent since our tip (Buy, 7p, 19 July 2012), but recent events mean it is time to book some profits. First, there was the odd timing of a trading update that came only two weeks after the third- quarter statement. It had a rushed feel as it contained no new contracts and seemed to have more to do with press speculation over a lost contract in the Ai Claims division. Now there is a cash call to raise funds for growth. It seems sensible to wait for more clarity on those pending contracts, until then we downgrade our recommendation to a hold.

Last IC View: Buy, 13p, 17 October 2012