Stockhead: Just what the doctor ordered: Bailador’s $52 million windfall from InstantScripts sale
- Bailador was an early investor in InstantScripts, sold to Wesfarmers for $135 million in July
- The investment generated $52 million for Bailador, a 62% IRR
- The growth capital fund now has +$100 million to deploy on new investments
Bailador Technology Investments has completed the $52 million cash realisation of its investment in telehealth platform InstantScripts following its $135 million sale to Wesfarmers in July.
The investment generated a 62% IRR for Bailador Technology Investments (ASX:BTI), a growth capital fund focused on the tech sector, with the cash realised at a valuation 25% higher than carrying value.
BTI initially invested $5.5 million, followed by a further $24.7 million in follow on investments, demonstrating its conviction in InstantScripts, which offers online prescriptions, telehealth consultations, blood test requests and medical certificates.
Wesfarmers (ASX:WES) announced in June its wholly-owned subsidiary Australian Pharmaceutical Industries Pty Ltd (API), had inked a ~ $135 million deal to purchase InstantScripts, which it says provides opportunities to leverage its existing pharmacy and Clear Skincare networks.
BTI co-founder and managing partner Paul Wilson says more than 600,000 have used InstantScripts with more than 1 million consults since its formation back in 2018 by Dr Asher Freilich and Maxim Shklyar.
“As an early institutional investor, we invested cash which helped expand InstantScripts product base to not just scripts but digital consults, referrals to specialists, pathology referrals, medical certificates and various areas of general health,” he says.
Wilson says he is proud of the growth of InstantScripts and enjoyed working with the team.
“We have worked with a wide range of colourful founders and management teams along our journey,” he says.
“The InstantScripts founder Dr Asher Freilich and the senior leadership team of Richard Skimin, Rick Bourke and Maxim Shklyar, with a diverse complimentary set of skills, were amongst the most passionate, smart, and fun teams that we have had the pleasure to work with,” he says.
When Freilich sent around his stakeholder note when the business was sold, he thanked Wilson, which he says was “nice recognition”.
“I must single out Paul Wilson from Bailador who showed unshakeable conviction in the business model from day one and was prepared to double down on his investment a number of times,” Freilich wrote.
“I reached out to him often for advice which he offered readily. It was always insightful and full of clarity.”
Lessons from Investing in InstantScripts
Wilson says there were many good lessons learnt from investing and growing InstantScripts.
He says InstantScripts enables doctors to deal with routine scripting more quickly for a subset of Schedule 4 non-addictive medications, freeing more time for in person consultations and addressing the chronic doctor shortage in Australia.
“The InstantScripts service allows consumers to access routine prescriptions more easily, and to have online medical consultations,” he says.
Wilson says this became particularly useful in the early days of the pandemic during lockdowns and when the health system was under pressure.
“They went from start-up pre-covid and thrived through Covid when digital health became widely accepted in the community as an effective way of providing basic services,” he says.
“It was not supposed to replace face-to-face consultations completely but for a lot of the basics its more efficient and frees up time for GPs.”
Wilson says API have significant scale and are great custodians to take the business forward.
“At a time of some high-profile missteps in the venture and expansion capital sector, the fact that InstantScripts was acquired by a knowledgeable buyer in a substantial all cash transaction is testimony to the quality of business that InstantScripts has become,” he says.
“We feel that the business is set up well for long term success and would have been happy to hold our investment longer.”
However, Wilson says some other shareholders felt that an exit was what they wanted.
“In a difficult decision, on balance we agreed to exit, meaning that while the IRR on investment is strong, the multiple of investment cost is not as high as we usually seek,” he says.
“As is Bailador’s intention, the investment in InstantScripts was carried at conservative valuations throughout our period of involvement, ultimately being realised at a valuation 25% above carrying value.”
Bailador’s winning track record
InstantScripts was the 12th full or partial cash realisation of portfolio company investments for BTI, with all above carrying value.
Wilson says InstantScripts was the 34th third party transaction involving a portfolio company and they have also been at or above carrying value.
“This track record is substantial compelling evidence that Bailador values its investments conservatively, and that there is likely further upside to come from our stated NTA at any given time,” he says.
Wilson says Freilich is already thinking about his next business ideas and into the future BTI may work with him again.
“The founder has stepped back from the company and is already working on his next business idea, and he’s run some of those past me, so we hope to work with him again,” he says.
“It does mean we are cashed up and have more than $100 million and hope to deploy that very soon.”
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.