April 8, 2014| Hamshire, United Kingdom: Quindell Plc is pleased to announce that it has signed the world’s largest telematics contract to date. The contract takes the form of a joint investment with the RAC in a new company, Connected Car Solutions Limited (“CCS”) to distribute Quindell and the RAC’s combined connected car capabilities.
Quindell and the RAC have appointed CCS to distribute Quindell and the RAC’s combined connected car capabilities within the UK and Canada, to vehicle manufacturers globally and to address together some other global opportunities, including fleet in Europe (the “Scope”). The RAC has also transferred intellectual property rights in relation to its connected car solutions. Whilst the joint investment is called Connected Car Solutions, the business will trade as both Quindell Connected Car Solutions and RAC Connected Car Solutions. The Quindell brand will primarily be used for existing insurance relationships, and the RAC brand, which has been licensed to CCS in relation to connected car solutions, will be used primarily for fleet, and consumer relationships.
Taking into account the proportion of CCS that is held by RAC, Quindell will reduce its profit retained by the Group on certain existing and future contracts, but this is more than offset by the increased opportunity brought in fleet in conjunction with the RAC and a number of other telematics contracts and opportunities that will transfer into CCS that are associated with this transaction.
In order to fund CCS, both Quindell and RAC have agreed initial funding of approximately £15 million each, and have both committed, subject to certain events, to fund the business in combination up to approximately £100 million in order to maximise the opportunity available to it. CCS will be owned 51% by Quindell and 49% by the RAC. Quindell is able to meet its share of the initial funding as part of the £50 million it had set aside for acquisitions and investments from its recent £200 million fundraise, having spent approximately £30 million of this to date. The remaining £150 million raised was set aside to support £450 million of organic growth, with this target being exceeded having won new business valued at £500+ million per annum since the November 2013 fundraise.
The joint investment represents the largest contract that the Group has entered into to date as revenues grow during 2014 and beyond, enabling an offering to RAC members that own vehicles representing circa 10% of the UK auto market.