Bell Potter LIC Weekly: Bailador validates PE valuations

Bailador validates PE valuations

Bailador Technology Investments Limited (BTI) invests in private Australian and New Zealand information technology companies in the ‘expansion stage’ of their business cycle, with global addressable markets and a high growth trajectory. Bailador favours Software-as-a-Service (SaaS) and Marketplace business models, with target businesses typically generating a minimum of $5m in revenues from a growing customer base at attractive unit economics. Provided the majority of the portfolio is unlisted and not subject to mark to market pricing, reported valuations within monthly updates are reviewed on periodic basis via third-party valuations or generally accepted industry valuation techniques, resulting in lower NTA volatility. While information technology multiples surged last calendar year, Bailador has taken a conservative approach, only recognising valuation increases based on business performance, or specific third-party transactions in the portfolio companies (continued in report).

Bell Potter’s Indicative NTA tracks the ‘indicative’ movement of a LIC’s underlying NTA each month by monitoring the percentage movements of the disclosed holdings and using an index to track the movement of the remaining positions. The Indicative NTA works best with LICs that have a high percentage of investments concentrated in its Top 20, regular disclosure of its Top 20, lower turnover of investments, regular disclosure of its cash position and the absence of a performance fee. We have also included an adjusted indicative NTA and adjusted discount that removes the LIC distribution from the ex-dividend date until the receipt of the new NTA post the payment date. This report is published each Monday prior to the market open and is available on a daily basis. Intraday indicative NTAs will be available on request through your adviser.

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