Why Branson’s ex right-hand man is investing in workplace health
Published AFR Dec 6, 2024 9:52am
David Baxby has invested in just about everything from airlines to gyms, mobile phone networks and tax-free shopping.
The former Goldman Sachs banker is best known for his role at Virgin Group as UK billionaire Richard Branson’s right-hand man. As co-chief executive of Mr Branson’s business empire, he spent years running airlines before returning to Australia to head Wesfarmers’ industrial business.
Now based in Sydney, his private equity fund Coogee Capital, named after the coastal suburb where he lives, is investing in founder-led private companies and Mr Baxby is putting his money into healthcare for the first time.
David Baxby has named his private equity fund Coogee Capital after the suburb where he lives. Peter Rae
“We saw a gap in the market to help founders scale their businesses. It is one thing to build a business to $50 million, it is quite another to take it to $250 million,” he said.
“The thesis is working pretty well. The biggest risk is how the dynamics with the founder work, and are they willing to relinquish control?”
Coogee Capital is a $100 million investment fund founded by Mr Baxby and his mate Tom Hardwick, best known for setting up childcare business Guardian Early Learning Group.
Their investment strategy is simple. They take equity stakes as high as 50 per cent in founder-run companies worth about $50 million, meaning it contributes $25 million to $30 million. The target is to triple returns within five to seven years. The founders must be willing to share control but remain hands-on. So far, Coogee has made four investments.
The newest is Perth-based workplace company RediMed, founded by plastic surgeon Hanh Nguyen, who fled the Vietnam War as a child and settled in Western Australia. Inundated with requests to deal with workplace injuries, his single clinic established in 2009 has since expanded to eight clinics with 200 staff.
RediMed investors David Baxby and Danny Sims pictured together in Sydney. Dominic Lorrimer
Dr Nguyen expanded the clinical services he offered into a medical rehabilitation business for sick or injured employees including providing the doctors and all the legal paperwork. RediMed’s customers include construction giant John Holland, engineer Monadelphous and casino operator Crown Resorts.
It was not an area he had invested in before, but Mr Baxby saw potential in a business dealing with workplace injuries, which cost Australian companies a fortune in lost productivity. Safe Work Australia data shows the median time lost from work-related injuries and illnesses has been increasing over the past 10 years with claims of 13 weeks or more off work now representing three-quarters of compensation cases.
“Time is the cancer in workers’ compensation. Availability is the problem. Every day a worker has off is a day in wages,” Mr Baxby said.
“Hanh built a Western Australian-centred medical rehab business but needed help recruiting the right team, expanding into the east coast, making some strategic acquisitions. We have helped him to do that, [providing] some capital. We are heavily involved in the day-to-day running of the business and hiring the key people.”
RediMed is now expanding into Victoria where Mr Baxby and his partners are picking through the debris of digital medicine business eReports, which went into administration in May owing millions in unpaid fees to doctors.
They have convinced some of those 400 doctors and psychologists to come and work for them, as well as buying eReports’ clinical assessment technology for legal claims. They have brought in Danny Sims, the former chief executive of Ramsay Health Care’s Australian hospitals to help.
The strategy now is to triple the company’s size and scale it nationally.
RediMed has five clinics in Western Australia and three in Queensland and wants to expand to 20 clinics in Australia. It has about 200 doctors, nurses, surgeons and other healthcare staff on its books. Finding staff is the biggest hurdle given Australia’s shortage of GPs and other specialists such as psychologists.
The business model is a contrast to the struggling private hospital sector which is threatening to shut facilities due to soaring costs and lacklustre patient numbers. RediMed will still refer workers to hospitals for treatment but wants to rely on them as little as possible.
Coogee’s other investments are shoring equipment group Aplant Hire & Lite Industries, Sonoma Bakery and recruitment firm WorkPac.
Mr Baxby and Mr Hardwick personally own 10 per cent to 20 per cent of the target companies in their own right. The rest of the capital comes from their network of 100 investors, including larger family offices and “like-minded entrepreneurs” who can write cheques of $500,000 to $1 million.
“We seek investors who are going to add value,” Mr Baxby said.