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What Is The Truth Of Quindell PLC’s Listing Failure?

quindellI’m always on the lookout for exceptional value opportunities. Quality companies with great long-term prospects, whose shares have been hit by some short-term issue, always pique my interest.

Naturally, when AIM-listed Quindell (LSE: QPP) took a hammering after the release of damning allegations by Gotham City Research — part of what Quindell’s Board called a “coordinated shorting attack” — my investing antenna twitched “value opportunity?”

After all, here was a company trading on a forward P/E of around 4, and with a small maiden dividend paid and the promise of more to come.

I’ve since been looking into all aspects of Quindell, trying to figure out if this is a quality business with a great future being offered in the market at a fantastic price (currently 225p).

I found Quindell’s announcement a couple of week’s ago that the UK Listing Authority (UKLA) had rejected the company’s application to join the Main Market both curious and troubling.

Quindell stated:

“The Company has today been advised that it has not been able to satisfy Listing Rule 6.1.3 at this time, and particularly, the criteria in Listing Rules Guidance Note 6.1.3E (5)”.

Founder and director Rob Terry added:

“Regrettably it is Quindell’s success and change of scale of its operations during the last three years that is a core reason for the Group not being deemed to be eligible for a Premium Listing at this time”.

On the face of it, then, there were other — what Quindell seems to think were ‘non-core’ — requirements under 6.1.3 that the company failed to satisfy.

Now, in my view, all the clauses of 6.1.3, and UKLA’s response to any of them, represent information that would be — to use the words of the Financial Conduct Authority (FCA) handbook — “likely to be used by a reasonable investor as part of the basis of his investment decisions”.

However, I’ve read unconfirmed reports that Quindell reassured shareholders who attended the company’s AGM that it was in fact only Listing Rules Guidance Note 6.1.3E (5) where Quindell fell down.

I emailed Stephen Joseph, Quindell’s head of investor relations, late last Friday regarding the reassurance said to have been given at the AGM, saying:

“I would be grateful if you could confirm that this is indeed the case, and that Quindell satisfied UKLA in every respect other than Listing Rules Guidance Note 6.1.3E (5)”.

I’ve so far had neither a reply to the query nor an acknowledgement of receipt of my email from Stephen Joseph.

Meanwhile, Lara Joseph (no relation to Stephen), a press officer for the FCA/UKLA, tells me that UKLA doesn’t itself publish its responses to listing applications, and that “we can’t comment on individual cases”.

So, as things stand, the truth of Quindell’s listing failure remains a mystery to me. I’ve suggested to Quindell that they release an RNS statement to clarify the matter.

As a financial writer and private investor, I generally find that companies are very prompt in responding to queries, and, indeed, go out of their way to provide clear and helpful information to prospective investors.

I have to say that Quindell’s communication, both on a public and personal level, isn’t impressing me so far.

For the moment, I've turned my attention to an under-the-radar growth share, recently unearthed by the Motley Fool's top smaller-companies analyst.

This £300m hidden gem, which is expected to increase profit margins and deliver double-digit returns for shareholders,has been declared by our leading analyst as the best growth share for 2014.

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G A Chester does not own any shares mentioned in this article.