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Markit launches PE valuation service

Markit has launched Markit Portfolio Valuations – Private Equity, a new independent valuation service for investors in private, unlisted companies. The service includes the provision of valuations for equity investments in growth and buy-out stage companies.

Markit Portfolio Valuations – Private Equity is designed to satisfy the statutory and policy requirements of investors, regulators and business managers for independent calculation of prices for input into net asset valuations and other key portfolio metrics.  The service is aimed at limited partners, banks and fund administrators as well as alternative asset managers, who are required by the Alternative Investment Fund Managers (AIFM) directive to ensure that their funds’ assets are independently valued.

Colin Southall, director, Markit Portfolio Valuations, says: “Over the last ten years, we have seen regulators placing increasing importance on the concepts of fair value and prudent valuation, highlighting the need for consistent valuation practices around the world.  Markit has extensive experience in the fair valuation of trade portfolios and we are excited to be extending this expertise to the field of private equity valuations.  Our objective is to take analyst subjectivity out of the process, replacing it with observable inputs and extensive peer comparisons to deliver objective, market-driven prices.”

Kevin O’Connor, director, Markit Portfolio Valuations, says: “Markit’s private equity valuations service uses a market approach and adjusts for points of difference between the portfolio company and our proprietary database of public peer company factor data. Valuations are standardised and therefore comparable over time and between firms to aid investment decision-making and reporting.”

Markit’s private equity valuations are based on the performance ratios of over 30,000 public companies.  These ratios, which include EBITDA, sales, net assets, gross assets and a discounted cash flow proxy, are adjusted based on the over- or under-performance of the portfolio company relative to its peers and used to calculate estimated enterprise values for the portfolio company.  A sector-specific weighting is then placed on each estimate and the weighted estimates are combined to provide the portfolio company’s valuation.

Markit Portfolio Valuations – Private Equity is available as a fully-hosted solution, automating the data collection and calculation work load.

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