Effective January 1, 2024, Katalysen Ventures ("Katalysen") has embraced an enhanced approach to portfolio valuations, aligning itself with esteemed peers such as Almi, Bonit Capital, byWit, and Navigare Ventures by collaborating with the professional third-party asset valuation firm, Leonh. All forthcoming portfolio valuations will adhere to this upgraded methodology, utilizing Leonh's expertise and databases to achieve a more precise estimation of the fair value of Katalysen’s portfolio assets. Preliminary estimates of the portfolio's total value using this updated valuation approach were concluded on the 23rd of January, and indicate significant differences in the valuation of individual holdings, but an insignificant difference in the portfolio's total value compared to last communicated (2023-12-06: 171.5 MSEK). Key changes to the valuation approach are outlined below.
Commencing January 1, 2024, the following adjustments are being instituted in Katalysen's portfolio valuation approach:
- Portfolio valuations are now executed in collaboration with the professional asset valuation firm, Leonh.
- Previously, individual portfolio holdings were appraised using a single valuation model per holding.
- The value of an individual portfolio holding is now assessed using a combination of valuation models, from which an average value is calculated.
- This combination of models always includes the most recent observable price from a relevant transaction.
- Furthermore, this combination always includes at least two models, and frequently more.
- In addition to the most recent observable price from a relevant transaction, employed models include DCF-analysis when reliable revenue traction is available, peer comparison using sector multiples, peer comparison using typical market pricing of similar ventures in similar markets, development since the most recent observable price, and more.
Katalysen Ventures is committed to adopting current best practices in valuing early-stage private capital investments, aligning with the International Private Equity and Venture Capital Valuation (IPEV) Guidelines. Key valuation principles can be summarized as follows:
- The primary objective of the valuation is to ascertain the fair value of an investment, defined as the price that would be received in an orderly transaction between market participants at the measurement date, reflecting prevailing market conditions.
- The evaluation of the fair value of each investment is performed at each measurement date to ensure accurate and up-to-date valuation.
- Techniques employed for determining fair value consider the unique nature, facts, and circumstances surrounding the investment, incorporating reasonable current market data and inputs, along with market participant assumptions.
- It is crucial to recognize that the price of a recent investment is not automatically deemed fair value.
- Due to inherent uncertainties in estimating fair value for early-stage private capital investments, exercising judgment and making necessary estimates should be approached with care.
- While caution is warranted, IPEV Guidelines advise against applying excessive caution and instead recommend considering information that is known or knowable as of the measurement date, ensuring a comprehensive and well-informed valuation process.
For further information on the IPEV Guidelines, please visit www.privateequityvaluation.com.
