Shares in crisis-stricken Quindell shot up yesterday after the insurance claims processor announced it is exploring a sale of one of its divisions.
The AIM-listed company told the stock market that it has entered into exclusive talks with a third party over a possible disposal of an operating division, as part of plans to bolster its working capital.
Quindell declined to provide further details and stressed that the talks could come to nothing. Nevertheless the share price was buoyed by 19 per cent in the wake of the news, rising to 47p.
Before he resigned in November, Quindell’s founder and chairman, Rob Terry, said one of the options for the company was to demerge its technology and outsourcing divisions. As recently as November, Quindell denied it was actively seeking to sell a 25 per cent stake in Nationwide Accident Repair Services. Analysts at Canaccord Genuity, one of Quindell’s former house brokers, have estimated in the past that its legal services division could have a standalone market valuation of £740m. Quindell’s entire market value as of yesterday was just £205m.
The company’s share price tumbled 95 per cent from a peak of 660p last February after a mysterious US outfit called Gotham City Research published a detailed blog in April tearing apart Quindell’s business model and profit projections.
Quindell won a libel action brought against Gotham in the High Court, although the US research firm failed to turn up, or offer a defence. And despite the victory, the company’s woes have multiplied in recent months.
Mr Terry was forced to leave in the wake of a controversial and complex share deal, which involved him selling his shares in the company with a commitment to repurchase them in two years. Canaccord Genuity also resigned as joint broker at around the same time. The company has also called in PwC to review its accounting policies and cash- generation expectations.
The sprawling group encompasses a telematics business – which uses black boxes to track drivers’ habits for insurers – along with law firms that handle personal injury claims and also healthcare operations.
Regulators blocked its planned move from AIM to the main market last June, citing its rapid, acquisition-driven growth over the past three years. Quindell’s reported gross sales for the third quarter of 2014 were £200m. But last month it revealed its professional services division, which deals with road traffic accident claims, has not been collecting as much cash as hoped. The next full earnings report is due on 23 March.