Stockhead: Bailador’s knack for picking tech winners makes it easier for investors
When it comes to investing in tech there are winners to be had but having the knowledge to know where to put your money can be the challenge.
Tech-focused growth capital fund Bailador Technology Investments (ASX:BTI) is working to make the challenge for investors wanting to pick a long-term winner easier.
Since listing on the ASX in 2014, BTI has been steadily growing its NTA, investing in technology companies with proven success, revenue and in the expansion stage.
BTI recently sold its share of open source databasing as a service company Instaclustr for $118 million and global advertising spend analytics business Standard Media Index (SMI) for $20 million.
The company was also an early investor in hotel commerce platform and tech unicorn SiteMinder (ASX:SDR), dropping $5 million in when it had annual revenue of about $5 million.
Both BTI co-founders and managing partners Paul Wilson and David Kirk went on the board of SiteMinder, which was a leader in Australia and in the UK but had a global addressable market.
“Sometimes a SaaS business like SiteMinder has that recurring revenue, great unit economics and huge addressable market,” Wilson told Stockhead.
“David and I helped them go global and up to the point where it listed on ASX last November with a $1.4 billion market cap and we’ve already realised $30 million from our original $5 million but still have around $60 million in listed shares.
“SiteMinder is a good example of the types of businesses we focus on.”
Cashed up after Instaclustr sale
BTI recently sold its share of Instaclustr for $118 million and SMI for $20 million.
The sale helped the company introduce a generous new dividend policy which commits to paying semi-annual distributions.
“Instaclustr has been another great success for Bailador with cash realised at more than 14 times cost and a key reason why we have over 50% of our assets in cash at just the right time,” Wilson said.
Kirk said Bailador has cash realisations of $152.9m during FY22 versus a cost base of $16.4m for a multiple of invested cost of 9.3x at an IRR of 43.4%.
Wealth of experience
Wilson grew up in Queensland and was working in corporate finance after university when he discovered a passion for venture capital. The only problem was the venture capital industry in Australia during the early to mid 1990s was almost non-existent.
“In corporate finance I was preparing forecasting models, doing valuations, helping prepare companies for public listing and raising venture capital,” he said.
“I decided I’d really like to be on the other side of the table investing in venture capital.”
“It seemed to me there were a lot of local companies selling out early because they couldn’t get the capital from local markets to expand, and I was determined to drive some change.”
So, in his mid 20s he did what many a young Australian does and purchased a one-way plane ticket to London.
Wilson joined a US Group called MetLife which managed about US$600 billion at the time and gave him and his co-worker a US$1 billion allocation to invest in venture capital and private equity.
“We were smart enough to know we wouldn’t be smart enough to beat the locals at that game,” he said.
“We chose to make commitments to about half a dozen funds we thought were the leaders and so for the next four years I learned from those leaders by co-investing in venture capital and equity in Europe.
“We achieved returns of more than 50% per annum while I was there but the whole time, I was picking up pieces of IP and best practice to put together a model to bring back to Australia.”
Back in Australia for Sydney Olympics
Jetting home just weeks before the Sydney 2000 Olympic games, Wilson joined a private equity firm called CHAMP and for the next six years helped build the team and investments with once again returns of more than 50% per annum.
“We invested $65 million in subscription television company Austar which returned $600 million, and we helped take it from EBITDA negative to producing about $120 million EBITDA in 18 months,” he said.
“I learned a lot about subscription businesses and the importance of unit economics, which is what you are making from your customer over their lifetime compared to the cost of acquiring and serving them which is super important.
“I also learned about the importance of retaining customers, often referred to as churn and just how valuable recurring revenue is because you don’t have to go out and make a new sale every time and a happy customer will stay on board and keep ticking over.”
His time at CHAMP set Wilson up for the investing Bailador does today in subscription-based businesses.
Back to Europe and a Murdoch partnership
Wilson then went to France where he was introduced to News Corp co-chair Lachlan Murdoch.
“I agreed to join him at his investment group Illyria where we invested in the Indian Premier League cricket team Rajasthan Royals, and DMG Radio which is now Nova and SmoothFM,” he said
Illyria was focused on media and technology, but Wilson was really interested in the technology side. That’s when he partnered with David Kirk (yes, that David Kirk) to form Bailador.
“David had seen the same opportunity as I had and particularly in the tech sector and especially for expansion capital for businesses with a proven product and market fit and generating substantial revenue,“ he said.
All Blacks rugby captain to tech investor
But Kirk came at it from a different background. A well-known rugby player, he captained the All Blacks in the inaugural World Cup in 1987.
He has had a varied career, he trained as a medical doctor, was also a Rhodes Scholar at Oxford, and policy advisor to New Zealand PM Jim Bolger. He has been the CEO of two ASX listed companies including Fairfax Media from 2005-2008.
“At Fairfax David led the acquisition of Trade Me for $650m, which was later listed on the ASX and NZX and Stayz for around $13 million which was later sold for I believe around $200 million. He had a proven background in understanding the opportunity in the tech space and helping companies grow,” Wilson said.
“We initially raised $20 million for Bailador from high-net-worth individuals who had worked with us over the years.”
The company has now had 12 full or partial cash realisations. Kirk said BTI has delivered a total shareholder return of 9.8% for the 2022 financial year, outperforming the S&P/ASX All Technology Index by a whopping 45.7% in FY22.
When it comes to investing in tech there are winners to be had but having the knowledge to know where to put your money can be the challenge.
Tech-focused growth capital fund Bailador Technology Investments (ASX:BTI) is working to make the challenge for investors wanting to pick a long-term winner easier.
Since listing on the ASX in 2014, BTI has been steadily growing its NTA, investing in technology companies with proven success, revenue and in the expansion stage.
BTI recently sold its share of open source databasing as a service company Instaclustr for $118 million and global advertising spend analytics business Standard Media Index (SMI) for $20 million.
The company was also an early investor in hotel commerce platform and tech unicorn SiteMinder (ASX:SDR), dropping $5 million in when it had annual revenue of about $5 million.
Both BTI co-founders and managing partners Paul Wilson and David Kirk went on the board of SiteMinder, which was a leader in Australia and in the UK but had a global addressable market.
“Sometimes a SaaS business like SiteMinder has that recurring revenue, great unit economics and huge addressable market,” Wilson told Stockhead.
“David and I helped them go global and up to the point where it listed on ASX last November with a $1.4 billion market cap and we’ve already realised $30 million from our original $5 million but still have around $60 million in listed shares.
“SiteMinder is a good example of the types of businesses we focus on.”
Cashed up after Instaclustr sale
BTI recently sold its share of Instaclustr for $118 million and SMI for $20 million.
The sale helped the company introduce a generous new dividend policy which commits to paying semi-annual distributions.
“Instaclustr has been another great success for Bailador with cash realised at more than 14 times cost and a key reason why we have over 50% of our assets in cash at just the right time,” Wilson said.
Kirk said Bailador has cash realisations of $152.9m during FY22 versus a cost base of $16.4m for a multiple of invested cost of 9.3x at an IRR of 43.4%.
Wealth of experience
Wilson grew up in Queensland and was working in corporate finance after university when he discovered a passion for venture capital. The only problem was the venture capital industry in Australia during the early to mid 1990s was almost non-existent.
“In corporate finance I was preparing forecasting models, doing valuations, helping prepare companies for public listing and raising venture capital,” he said.
“I decided I’d really like to be on the other side of the table investing in venture capital.”
“It seemed to me there were a lot of local companies selling out early because they couldn’t get the capital from local markets to expand, and I was determined to drive some change.”
So, in his mid 20s he did what many a young Australian does and purchased a one-way plane ticket to London.
Wilson joined a US Group called MetLife which managed about US$600 billion at the time and gave him and his co-worker a US$1 billion allocation to invest in venture capital and private equity.
“We were smart enough to know we wouldn’t be smart enough to beat the locals at that game,” he said.
“We chose to make commitments to about half a dozen funds we thought were the leaders and so for the next four years I learned from those leaders by co-investing in venture capital and equity in Europe.
“We achieved returns of more than 50% per annum while I was there but the whole time, I was picking up pieces of IP and best practice to put together a model to bring back to Australia.”
Back in Australia for Sydney Olympics
Jetting home just weeks before the Sydney 2000 Olympic games, Wilson joined a private equity firm called CHAMP and for the next six years helped build the team and investments with once again returns of more than 50% per annum.
“We invested $65 million in subscription television company Austar which returned $600 million, and we helped take it from EBITDA negative to producing about $120 million EBITDA in 18 months,” he said.
“I learned a lot about subscription businesses and the importance of unit economics, which is what you are making from your customer over their lifetime compared to the cost of acquiring and serving them which is super important.
“I also learned about the importance of retaining customers, often referred to as churn and just how valuable recurring revenue is because you don’t have to go out and make a new sale every time and a happy customer will stay on board and keep ticking over.”
His time at CHAMP set Wilson up for the investing Bailador does today in subscription-based businesses.
Back to Europe and a Murdoch partnership
Wilson then went to France where he was introduced to News Corp co-chair Lachlan Murdoch.
“I agreed to join him at his investment group Illyria where we invested in the Indian Premier League cricket team Rajasthan Royals, and DMG Radio which is now Nova and SmoothFM,” he said
Illyria was focused on media and technology, but Wilson was really interested in the technology side. That’s when he partnered with David Kirk (yes, that David Kirk) to form Bailador.
“David had seen the same opportunity as I had and particularly in the tech sector and especially for expansion capital for businesses with a proven product and market fit and generating substantial revenue,“ he said.
All Blacks rugby captain to tech investor
But Kirk came at it from a different background. A well-known rugby player, he captained the All Blacks in the inaugural World Cup in 1987.
He has had a varied career, he trained as a medical doctor, was also a Rhodes Scholar at Oxford, and policy advisor to New Zealand PM Jim Bolger. He has been the CEO of two ASX listed companies including Fairfax Media from 2005-2008.
“At Fairfax David led the acquisition of Trade Me for $650m, which was later listed on the ASX and NZX and Stayz for around $13 million which was later sold for I believe around $200 million. He had a proven background in understanding the opportunity in the tech space and helping companies grow,” Wilson said.
“We initially raised $20 million for Bailador from high-net-worth individuals who had worked with us over the years.”
The company has now had 12 full or partial cash realisations. Kirk said BTI has delivered a total shareholder return of 9.8% for the 2022 financial year, outperforming the S&P/ASX All Technology Index by a whopping 45.7% in FY22.
This article was developed in collaboration with Bailador Technology Investments, a Stockhead advertiser at the time of publishing.
This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.