Just days after making an unusually timed stock exchange announcement concerning progress on order intake (see Quindell counts chickens), buy-and-build insurance business process services player Quindell Portfolio has announced a share placing which aims to raise £26.5m from new and existing institutional shareholders. The placing price at 13p is at a marginal discount to last night’s close. The new shares represent about 7% of Quindell’s existing share capital (6% after dilution).
Quindell has been pursuing a strategy of aggressive company and contract acquisition. In H1 alone the company shelled out £28m cash for M&A (for the latest, see Quindell makes second legal services acquisition), which was mitigated by a £30m placing in February this year. Notwithstanding that, the business was operating cash flow positive in the period to the tune of £9.3m.
Quindell’s voracious appetite needs careful digestive management. At the risk of mixing dubious metaphors, kicking off major outsourcing contracts consumes resources, both cash and people. Couple this with the distraction of ‘onboarding’ acquired companies means that management really do need to keep their eyes very firmly on the several balls that are in play at the same time.