Quindell Portfolio’s insatiable appetite for M&A continues. This time it is increasing its shareholding in property claims SaaS provider 360GlobalNet Limited (360) from 19% to 60%, as well as acquiring unnamed ‘associated companies’.
Quindell is paying the equivalent of £11.5m in shares for the additional 41% stake. The shares are being issued in tranches, depending on 360 achieving targets for £2m of profit in 2013, and at least £10m PBT in 2014 and 2015. Quindell was a founding investor in 360, and in April 2012 increased its ownership from 3% to 19% for £2.15m. 360’s value to Quindell has increased significantly between then and now – with the busines now being valued at £28m vs. c£15m last April.
According to its very sparse website (see here) 360 has developed a system that uses video acquisition, unmanned aerial vehicles, van mounted telescopic mast systems, as well as crowd-sourcing and data and analytics. Quindell says 360's focus is on fraud prevention, compliance monitoring and ‘managed crowd sourcing’. The company has apparently already conducted a pilot with a major listed insurer to save 30% of its property claims costs. To us the approach sounds very ‘Big Brother’, and we wonder whether this is really something that could achieve mass market appeal.
Quindell yesterday announced a deal with the one of the UK's largest accident management companies, to deliver over 1,000 injury claims per month. Quindell is being engaged on a 6 month rolling contract. The pilot already achieves annual revenue run rate of £36m. But the contract shows the risks inherent in Quindell’s business model. It needs to prove the value of its offering quickly and continuously, in order to retain these sorts of client relationships.