Deloitte and LPEQ have produced a research paper identifying the key considerations of Listed Private Equity valuations. The challenge for both LPE managers and investors is that valuing portfolios of private companies is complex and involves inherent judgement, discretion and flexibility. The paper considers the following factors:
This research considers the following factors:
- portfolio valuations of private equity investments are complex and involve inherent discretion and flexibility allowed by the accounting and regulatory frameworks;
- portfolio valuations might be conservatively determined, as implied by the uplifts often achieved when an investment is realised;
- valuations are not updated frequently enough and are out of date when published, especially when markets are volatile; and
- there is a lack of information disclosure and transparency to enable an investor to understand how the portfolio has been valued.