Quindell PLC Makes Acquisition To Drive Growth

The shares of Quindell (LSE: QPP) saw a 8% increase to 33p during early trade this morning after the software and consultancy firm confirmed over £100 million of new business, as well as the reaching of late stage contract negotiations worth £300 million yearly.

The group’s growth in telematics is exceeding market expectations. Telematics — also known as black box insurance — offers personalised car insurance based on how well you drive. In the UK Quindell has a dominant market position having grown the number of policies sold by 116,000.

Auto insurance provider Ingenie represents around a fifth of black box insurance growth and Quindell is increasing its investment in the company by 6% to 49%. Through share options the group hopes to achieve 100% ownership of Ingenie, in order to propel growth in the technology sector, with potential for international expansion.

Quindell, the second-largest AIM company, is set to join the main market next month, potentially launching itself into the FTSE 250.

Of the Ingenie acquisition, Rob Terry, the Quindell chief executive, commented:

“We’re very pleased to have reached this option agreement in principle to acquire ingenie. They have developed a great brand and a compelling business model that aligns with our technology growth strategy. I’m also delighted that the founding members, senior management and brand ambassadors will stay with ingenie – we’re investing in people and expertise as well as products and technology. With this team, we look forward to replicating ingenie’s success internationally.”

Prior to today, City experts were expecting Quindell’s annual results to show earnings equivalent to 3.5p per share. Following today’s price movement the shares may therefore trade on a P/E of 9, while a maiden dividend payment is set to be announced at the time of publishing its full year results.

The decision to ‘buy’ — based on those ratings, today’s results and the wider prospects for the insurance sector — is solely your decision.

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> Mark does not own shares in Quindell.