Bringing clarity to your investments
Independence and transparency in valuations are fundamental challenges facing Alternative Investment Fund Managers AIFMs and funds.
In the absence of active market quotations for illiquid investments, the accelerated shift to fair value accounting has proved challenging for the alternative investment industry, especially as financial products get increasingly complex in nature. This has also brought increased investor, regulator and auditor scrutiny.
COVID-19 has compounded this, bringing additional uncertainty to AIFMs and funds as they seek to finalise portfolio investment carrying values over the coming quarters.
We are a one-stop valuations provider for your entire portfolio of investments. Whether it’s illiquid unquoted equity investments, credit portfolios or other financial derivatives, we are able to provide full valuation analysis, in line with the International Private Equity and Venture Capital (IPEV) guidelines and support for all asset classes within a portfolio. We have significant experience across a range of asset classes:
- Private equity
- Venture capital
- Real estate
- Private credit
- Financial instruments & derivatives
Our portfolio valuation solutions
We draw upon the expertise of 1,500 valuation professionals as well as resources from across sector specialisms and geographies in order to deliver robust and reliable valuation opinions. The key areas we can assist throughout the dispute and litigation process are:
- Valuation framework/set-up
- Seed capital and fundraising
- Mark-to-market and period asset valuations
- Investment and transaction advice
- Reorganisations, inter fund transfers
- Departing member / partner
- Valuation for tax purposes
KPMG offers a variety of reporting methods on your investments. Our visual dashboards enable you to flex and sensitise the key value drivers for each of your investments so you can see the impact on the overall portfolio including showing how investments progress over time, whether that be monthly, quarterly, semi-annually or annually.
Current market trends
The impact of COVID-19
COVID-19 is first and foremost a public health emergency. At the same time, it is leading to an extended period of economic downturn and profound disruption to established business and financial systems. For asset managers and investors, this is bringing significant challenge and uncertainty when finalising carrying values for portfolio investments.
The “shelf life” of valuations has decreased
Current economic volatility has lessened the shelf life of valuations and increased the demands for more frequent views on value.
Portfolio investment valuation is no longer just a year end concern, but is increasingly being considered through full quarterly valuation cycles in order to ensure investors in alternative assets are provided with timely valuations reflecting current economic conditions.
Increased scrutiny over financial reporting
Regulator scrutiny over auditing practices has resulted in the need for greater fair value documentation and independence.
Increased holdings of complex and/or illiquid investments to meet return requirements
The unobservable inputs that underpin the fair value calculations for complex and illiquid investments have become focal points for outside scrutiny.
Increased market volatility has brought even greater challenges in valuing illiquid assets.
The importance of independence in investment valuations
Valuation impacts a stakeholder assessment of fund performance, entry/exit, and the accuracy of their financial reporting.
The updated International Private Equity and Venture Capital (IPEV) Valuation Guidelines emphasise, as best practice, the use of independent internal valuation committees and/or external advisers to review valuation methodologies, significant inputs, and fair value estimates for reasonableness.