Quindell on the up with hedge fund investment and heavyweight appointments

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12 January 2015


On the up: Quindell shares boost

On the up: Quindell shares boost

Alternative business structure Quindell plc was finally on the up last week, with its share price soaring 58% in four days.

And they were up a further 30% in early trading today after heavyweight figures were appointed the company’s new chairman and vice-chairman.

Last week’s boost came from hedge fund Toscafund Asset Management increasing its stake in the claims outsourcer.

Having started last week at 53.75p, Quindell’s shares closed on Friday at 84.75p – its highest since early November, but still massively down on a high of 650p around this time last year.

Toscafund now holds 5.4% of Quindell, making it the second largest shareholder after M&G Investments, part of Prudential. Owning 5% of a listed company triggers reporting requirements, so it is not known how long it has been a shareholder.

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The Financial Times said there was surprise in the market that Toscafund had invested at this moment given that the independent review of the business being carried out by accountants PwC has yet to be completed. This is expected by the end of February.

The newspaper said Toscafund is known for taking “large, high-risk positions”, while according to the London Evening Standard, it has a reputation for aggressively pushing for change to drive turnarounds at companies it invests in, with founder Martin Hughes nicknamed ‘the Rottweiler’.

Having on Friday sent out an announcement dampening speculation about the appointment of a new chairman to succeed Rob Terry, today Quindell announced that it is to be Richard Rose, who is also currently chairman of AO World plc, Crawshaw Group plc, Booker Group plc and Anpario Group plc.

Mr Rose’s previous roles include that of executive chairman of accident management company Helphire plc (now Redde plc).

Jim Sutcliffe, former chief executive of financial services giants Old Mutual and Prudential, will join as Quindell’s strategy director and deputy chairman. Among other roles, he is a non-executive director of the Financial Reporting Council and chairman of its codes and standards committee.

Both have been granted options over Quindell’s shares – 8.73m for Mr Rose and 10.9m for Mr Sutcliffe. They will be granted with exercise prices from 68.65p up to £3.40, and vesting will occur at intervals spread over the next 12 months.

Quindell has also brought in consultancy firm BaxterBruce – of which Mr Sutcliffe is non-executive chairman – and will be aided by its associates Marisa Cassoni and John Tomlins, also both senior City executives.

The company also provided a trading update, focusing on its cash flow. With £13m “operating cash inflow” in the second half of 2014, the board said it “remains comfortable with the group’s overall cash position”; as at 31 December 2014, Quindell had gross cash of approximately £69m and drawn banking facilities of approximately £52m.

Quindell announced at the start of 2015 that it had entered into an exclusivity arrangement with a third party in respect of the possible disposal of one of its operating divisions. It said today: “The company remains engaged with this party and is also in early discussions with a range of parties interested in exploring possible transactions with the group relating to a number of its operating businesses but there can be no certainty that any of these discussions will lead to the disposal of any of the group’s assets.”

 



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