Sep 5, 2023

Ability to generate repeat revenue When you add all those elements together, it ends up being an impressive business in theory. At the end of July 2023, the ASX tech share had a portfolio of seven positions: hotel software business Siteminder Ltd ( ASX: SDR ), tours and activities management and booking software company Rezdy, telehealth business Access Telehealth, volunteer management software business Rosterfy, e-commerce personalisation business Nosto, men’s digital healthcare business Mosh and language translation business Straker Ltd ( ASX: STG ). It recently exited its InstantScripts position, which delivered an internal rate of return (IRR) of 62%. At the end of July, it also had a strong net cash balance of $108.4 million, which can be used to pay dividends and make new investments. NTA discount This is the part where I think it’s really good value. At the end of July 2023, the business said that it had a pre-tax net asset value (NAV) of $1.70 per share or $246.8 million in total. At the time of writing, the Bailador share price is $1.26, so it’s currently at a 26% discount to the pre-tax NAV. The post-tax net tangible assets (NTA) per share was $1.60 at the end of July 2023. Don’t forget that $108.4 million of the ASX tech share’s NTA, or 75 cents per share, is cash. That means the ASX tech share’s asset value has a strong backing. The unlisted businesses’ values may be conservative. Bailador has a history of being cautious with the valuations of its holdings (which is a good thing). For example, the recent InstantScripts sale will see net cash proceeds being 25% higher than the carrying value (what it said it was worth) before the sale. I’m not going to speculate what the unlisted Bailador businesses could be worth, but their value if they were to be sold could be materially higher than what Bailador says. Dividend returns I like that the business is paying investors a regular dividend . It enables investors to benefit from realised sales, and also provides strong ‘real’ returns, even if the NAV discount doesn’t close up. The Bailador dividend policy is that the ASX tech share’s shareholders will get a dividend yield of 4% of the pre-tax NTA per year. With the NTA being $1.70, the dividend could be 6.8 cents per share. Due to the large NTA discount, at the current Bailador share price that’s a fully franked dividend yield of 5.4%, or 7.7% grossed-up. I think this ASX tech share and its portfolio can do well in the long term, while collecting solid dividends in the short term. I’m a shareholder myself because I believe in the value and future of the business. Motley Fool contributor Tristan Harrison has positions in Bailador Technology Investments. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Bailador Technology Investments. The Motley Fool Australia has recommended Bailador Technology Investments. The Motley Fool has a disclosure policy . This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips. More on Technology Shares