Fans of fast-growing insurance claims specialist Quindell (QPP:AIM) should take note of NAHL's plans to list on Aim in May. Although the latter is classed as a consumer marketing business, its core brand is National Accident Helpline which operates in the same personal injury claims space as subsidiaries of Quindell. It is expected to be positioned as an income stock, offering a 5% to 6% dividend yield.
National Accident Helpline is hoping to raise £50 million and expects to be valued at £100 million upon joining the stockmarket. Its admission to Aim will provide a partial exit for a range of existing shareholders including private equity group Inflexion. The bulk of the £50 million fund raise will go to exiting shareholders, but if the roadshow goes well and demand exceeds expectations then additional cash will go into a pot for future acquisitions.
The business attracts customers seeking 'no win, no fee' legal assistance through direct response marketing. It filters down the enquiries to provide the best quality leads to a panel of law firms. They pay National Accident Helpline annual marketing fees as recent regulatory changes mean that so-called ambulance chasers are no longer allowed to get traditional referral payments from the lawyers.
National Accident Helpline reckons it can grow its earnings through two ways. Firstly, it wants to increase its market share and provide more high-quality leads to law firms. The more successful leads it generates, the greater the chance of charging more money when the annual marketing fee is up for renewal. Secondly, it wants to increase ancillary revenue including medical assessments.
There's plans to extend its activities into areas like accident management services. The group is also developing a medical negligence screening service that it hopes will add value to its panel of law firms by cutting costs and complexity.
The group made £39.7 million revenue in 2013 and £9.8 million operating profit. The latter figure excludes £9.4 million commission from a discontinued insurance product. The business generates lots of cash, equal to £10.4 million net operating inflow in 2013. It plans to pay 66% of retained profits as dividends each year.
It spent £23 million on marketing in 2013, funded entirely from cash flow. National Accident Helpline's advertisements include the 'Underdog' talking animal characters.