SBAI Opens Consultation on New Valuation Standards for Illiquid Private Market Asset Managers
The proposed changes aim to ensure that the Standards remain relevant and aligned with developments in the alternative investment industry, particularly in relation to illiquid assets. This includes Standards which seek to introduce a consistent framework for assessing the quality of the valuation processes used by alternative investment managers, whilst enhancing transparency and disclosure provided to institutional investors.
The SBAI concurrently publishes new guidelines on governance, transparency, and disclosure in private market valuations. This guidance is designed to educate allocators and investment managers on good valuation practices, addressing a range of valuation methodologies, as well as the variability and subjectivity that can arise in private market valuation processes.
The guidance provides practical advice on how investors and managers should assess the role of third-party service providers in supporting valuation processes, while also addressing the risks of overreliance and failure to conduct adequate due diligence.
These guidelines have been developed by the SBAI’s Private Market Valuations Working Group, comprised of leading alternative investment managers and institutional investors from the SBAI’s global network of Signatories and Investor Chapter members with more than USD$8tn in assets under management.
Mario Therrien, SBAI Chair: “In recent years, private market valuations have been a source of uncertainty for investors, and the release of these guidelines marks a critical milestone in improving transparency and trust within the industry. Private markets are complex, but this guidance provides a roadmap to ensure that investors understand the key factors that influence valuations, including the role of third-party providers. I am proud of the collaborative efforts that have gone into this work at the SBAI.”
Paula Volent, SBAI Trustee, Vice President and Chief Investment Officer at Rockefeller University: “As an endowment, we have identified valuation risk as a key concern. These guidelines are a crucial step in providing clarity on how managers and service providers formulate valuations. By improving transparency and establishing clearer disclosure practices, the guidelines help ensure that we, and other institutional investors, can make more informed decisions based on a stronger understanding of the assumptions and methodologies driving these marks.”
Stuart Fiertz, SBAI Trustee, Co-Founder, President, and Director of Research at Cheyne Capital Management: “Transparency and mutual understanding are key to building trust in private markets. These guidelines are an essential step in ensuring that investors feel confident in the valuations they rely on.”
Chris Gradel, SBAI Trustee, Chief Executive Officer and Co-Founder at PAG: “These proposed Standards represent a balanced approach between increasing transparency and disclosure for investors, whilst maintaining operational flexibility for managers.”
Marta Klein, Veteran ODD Practitioner at a large SWF, SBAI Private Market Valuation Working Group Member: “Transparency in the valuation process fosters a stronger partnership between managers and investors, leading to a more informed investment community. These guidelines provide investors with the tools to assess valuations accurately and understand where subjectivity may influence the outcomes.”
Nicolas Konialidis, Technical Director of the Business Valuation Board at the International Valuation Standards Council (IVSC): “Private market valuations require careful judgment and clear communication to ensure trust and confidence among stakeholders. The SBAI’s efforts to strengthen governance and disclosure are aligned with the IVSC’s broader mission to promote consistent and transparent valuation practices across all asset classes. The SBAI’s initiative contributes to a more robust and informed investment ecosystem.”
Ryan McNelley, Managing Director at Kroll: “Third-party service providers can play a crucial role in supporting private market valuations. This guidance highlights that not all service providers are created equal, the range of services available and the sophistication and reputation of teams undertaking valuations should be a key concern for investors.”
The SBAI is an active alliance of over 150 alternative asset managers and over 100 institutional investors dedicated to advancing responsible practice, partnership, and knowledge. It advocates for an effective alternative investment ecosystem through robust standards and the exchange of ideas. For more information on the SBAI or to join the SBAI community, please contact [email protected] or visit www.sbai.org.
