Quindell share price falls as chairman Rob Terry mulls break-up to unlock value
Quindell’s chairman Rob Terry would consider demerging or selling parts of the business if it remained undervalued by the market.
“The whole business as a public entity is undervalued because it’s trading on two times [enterprise value to earnings before interest, taxes and amortisation] when the index average is way higher,” Terry told City PM
“The valuation will re-correct as we generate the cash or if it doesn’t then we have other options available to us such as demerging the technology divisions away from the outsourcing divisions as an example, and listing them separately.”
Quindell has already been approached with a £140m offer for part of its business that generates just four per cent of its profit, City PM understands.
Analysts at Canaccord Genuity, one of the two house brokers, said that Quindell’s legal services division if valued at the same ratio of its smaller competitor Slater & Gordon would reach a market valuation of around £740m, larger than the whole company’s current capitalisation of £624m.
Quindell yesterday reported that revenues soared 115 per cent to £198m in the third quarter ending 30 September.
The strong performance was largely driven by the professional services side of the business which increased sales by 124 per cent to £177m, while its digital solutions sales grew 20 per cent to £23m. The insurance outsourcing firm also saw adjusted core profits increased 141 per cent to £83m during the period.
The results are another boost for the Aim-listed firm which had to issue a statement last month, saying it knew of no reason for a fall in its share price.
Shares yesterday fell 7.3 per cent to 143p on the news.