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Quindell Portfolio has given in to pressure from investors and its tanking share price in May (see here), by getting out of its controversial equity swap arrangement with Accident Advice Helpline (AAH). Instead, Quindell is now using the 64.8m equity swap shares as part payment for its latest investment, a 19% stake in US-based insurance gamification software player Himex Ltd. Quindell is also paying £1.8 million in cash. It will take a £6m non-cash charge to exit the AAH equity swap in FY13.
Following the investment, Quindell will become the exclusive distributor of Himex's gamification UBI (usage based insurance) products in the UK, Canada, Brazil and across South America. From what we can tell, Himex effectively offers a 3D gamification platform intended to help insurers visualise risks in a virtual world setting. Quindell wants to tie in some of its telematics offerings to this model.
Quindell also updated on the six months ended 30 June. Gross sales are expected to be c£166m (vs. turnover of £45m in H112) and EBITDA profits c£48m. This means Quindell’s EBITDA margin is heading south at 29% today vs. c33% in H112 (see here).
Quindell’s wins so far in 2013 include some significant names like the RAC (see here), Honda UK (adding 50 independent outsourcing and referral partners) and Renault UK. There is also an unnamed UK insurance broker with over 1.2 million auto policy holders worth up to £100 million per year. So there’s plenty here to keep Quindell busy.
Our concern is Quindell becomes ‘too busy’ juggling all these activities and interests. And therein lie the risks.
