ASIC demands company files in probe of iSelect float flop
The corporate regulator has demanded a swath of internal documents from iSelect in a probe of the insurance comparison website's disastrous stock exchange debut.
Australian Securities and Investments Commission investigators have requisitioned the documents, including financial records, emails and meeting minutes, as part of an inquiry into the company's compliance with continuous disclosure and fund-raising laws.
An ASIC notice, obtained by BusinessDay, required iSelect to hand over all its records relating to a profit announcement on August 29 in which the company admitted it had missed its revenue target.
The regulator also called for documents relating to iSelect's announcement on the same date that it expected to meet the earnings forecast for the 2013 calendar year contained in its prospectus. iSelect was told to deliver the documents to ASIC's Melbourne office by 1pm last Friday.
Founded in 2000 by Damien Waller and David Urpani, iSelect listed on the ASX on June 24 after raising $215 million in a heavily promoted public offering backed by Credit Suisse and Baillieu Holst.
Despite being pitched as a float that would "shoot the lights out", iSelect shares dived 15 per cent on debut and have not since traded above their issue price of $1.85.
In its notice, dated September 6, ASIC told iSelect to produce all documents relating to the August 29 announcement, including "due diligence files, working papers, boardroom papers, letters, emails, facsimiles, file notes or diary entries". ASIC also demanded iSelect's monthly management accounts and board reports, together with any documents relating to management discussions of the company's revenue shortfall.
iSelect's August 29 announcement revealed group revenue of $118 million, 2.9 per cent below the prospectus forecast of $121.6 million.
At the same time, chief executive Matt McCann reaffirmed iSelect's forecast that earnings before interest, tax, depreciation and amortisation for the year to the end of December would total $30 million.
However, ASIC has demanded documents "which record or relate to the ... reaffirmation that CY13 forecast would be met, all discussions relating to that reaffirmation and the current version of the CY13 forecast that support the reaffirmation, and all changes made to the component items in the current version of the forecast as against the version used for the prospectus".
iSelect's share price fell 6 per cent on August 29 and another 12 per cent the next day.
ASIC's notice was issued "in relation to ensuring compliance with the requirements of section 674 and chapter 6D of the Corporations Act".
Section 674 requires listed companies to tell the market of "information that a reasonable person would expect, if it were generally available, to have a material effect" on its share price. Contravening the section can be a criminal offence.
Chapter 6D covers prospectuses and includes a requirement to disclose "all the information that investors and their professional advisers would reasonably require to make an informed assessment" of matters including the firm's financial performance.
1 June 24
Stock plunges 15 per cent on debut
2 August 29
Announces profit of $13.4 million, missing revenue and profit targets in prospectus.
3 August 30
Shares fall 12 per cent to $1.42.
4 September 2
Issues announcement attacking “inaccurate media commentary”.
5 September 6
ASIC demands books and records
6 September 13
Deadline to deliver documents to ASIC.