February 12, 2024

Stockhead: Tech-focused capital fund Bailador positions for more investments after robust H1 FY24

Via stockhead.com.au

  • Bailador Technology Investments releases strong H1 FY24 with net profit attributable to shareholders of $22 million
  • Portfolio companies expected to deliver a robust performance for remainder of FY24
  • Ending the half with $94 million in cash, the tech fund is well-positioned for further investments


Special Report:  Tech-centric capital fund Bailador Technology Investments has a released a strong H1 FY24 result and is cashed up to take advantage of new and follow-up investments during the remainder of the fiscal year.

As optimism increases that central banks are nearing the end of their rate hiking cycle and may even start making cuts as inflation starts to fall – fuelling interest in growth stocks – Bailador Technology Investments (ASX:BTI) is well-positioned to further strengthen its position in the tech sector.

Among highlights of H1 FY24 were:

  • Net Profit attributable to shareholders was $22 million, up from a loss of $5.2 million in H1 HY23
  • Interim dividend declared totalling 3.5 cents per share fully franked represents an annualised 5.2% yield on BTI shares1 (7.0% when a grossed up for franking credits)
  • $52 million cash proceeds from full cash realisation of InstantScripts delivered 61% IRR
  • $29 million of capital deployed over last 12 months across new and existing portfolio companies
  • Dividend reinvestment plan (DRP) active with a 2.5% discount


The BTI portfolio ended 2023 in a strong position with seven investments. The combined portfolio revenue was $379 million, with 41% growth over the past 12 months, ~66% gross margin and ~96% recurring revenue.


NTA per share growth driven by strong third-party valuations growth

BTI’s post-tax NTA per share ended H1 FY24 at $1.64, 12 cents or 8% higher over the six months net of all fees.

When adding back the September 2023 fully franked dividend of 3.2 cents per share, BTI’s post-tax NTA increased 10%.

The growth in NTA per share was largely driven by valuation increases to two major investments.

BTI says hotel bookings platform SiteMinder, which was 36% of post-tax NTA, increased its valuation 76%.

The valuation of Access Telehealth, which was 9% of BTI’s post-tax NTA, also climbed 28%.

BTI co-founder and managing partner David Kirk says the company achieved a strong result for shareholders in H1 FY24.

“Our portfolio performance continues to shine with strong valuation uplifts in SiteMinder and Access Telehealth,” he says.

“The rest of BTI’s portfolio companies are in great shape and we expect to see strong performance from them for the remainder of FY24.”


Almost $10m paid in dividends over 12 months

BTI declared an interim dividend of 3.5 cents per share, fully franked, representing an annualised yield of 5.2% on the closing price of BTI shares on February 6, 2024, or a grossed up annualised yield of 7%.

The dividend is part of BTI’s ongoing commitment to pay regular dividends to shareholders  totalling 4% of pre-tax NTA per annum.

Over the last 12 months, BTI has paid or declared a total of $9.7 million or 6.7 cents per share in fully franked cash dividends to shareholders.

The company has previously acknowledged that many Australian investors appreciate receiving valuable franking credits, where the value of tax paid by a company is passed back to shareholders in the form of franking credits on distributed dividends.

“Bailador’s regular fully franked dividends provide investors with a compelling ongoing yield, on top of exposure to the main engine of returns which is capital gains,” Kirk says.


Dividend returns better than cash

BTI says cumulative returns since the start of FY21 have been generated by:

  • Share price appreciation of 82%
  • Cash dividends of 22%
  • Franking Credits of 9%

“Factoring in share price appreciation, cash dividends received and franking credits received, $100k invested in BTI shares at the start of the 2021 financial year is worth $213k today,” Kirk says.

He says for most investors, the grossed-up yield of 7.0% per annum is the appropriate number to compare to interest rates, which are not franked and superior to cash.

Furthermore, the company introduced its dividend reinvestment plan (DRP) in February 2020, which will apply to the declared dividend.

The DRP price was determined by the BTI board of directors to be a 2.5% discount to the VWAP over the four trading days from February 12-15, 2024.

With the franking credits balance sufficient to support fully franked dividends at the current rate for a period of five years, and ample cash balance, BTI says its DRP policy is intended to endure over a long period.


Cashed up for new investment opportunities

BTI co-founder and managing partner Paul Wilson says with net cash of $94 million as of December 31, 2023, the company is well positioned to take advantage of additional investment opportunities.

During 2023, BTI made a total of $29 million in additional investments, including $10 million investment in new portfolio company Rosterfy, which specialises in volunteer management software.

BTI also invested a further $19 million across several follow-on investments within the portfolio.

Wilson says it is likely that additional new and follow-on investments will occur during the remainder of FY24.

“With net cash of $94m, Bailador is in a strong position to undertake additional investments over the remainder of FY24 and take advantage of valuations for emerging technology companies which have largely returned to more realistic levels,” he says.

“We are pleased to be positioned to provide our shareholders with certainty of an ongoing cash yield, while continuing to generate significant capital gains in portfolio assets, which remains the primary engine for returns.”