SBAI welcomes findings of the FCA’s review into Private Market Valuation Practices
The Standards Board for Alternative Investments (SBAI) welcomes the findings of the Financial Conduct Authority’s (FCA) review into Private Market Valuation Practices. The SBAI agrees with the FCA assessment that private markets are an important means for institutional investors to diversify their portfolios and have become an important source of capital for companies. Poor valuation practices can have far-reaching consequences, including inequitable treatment of investors, overpayment of fees, and can undermine investor allocation decision making and confidence in our industry.
The FCA’s findings, along with its recommended actions for firms and proposed good practices, align closely with the practices set out in the SBAI’s Alternative Investment Standards (‘Standards’) and the SBAI’s recent proposal for new Standards to strengthen the governance and transparency around the valuation practices in private markets, as set out in the SBAI Consultation Paper CP5.1 on 30 January 2025. These proposals have been derived through collaborative efforts in the SBAI’s Private Market Valuations Working Group and other forums – which bring together alternative investment managers and institutional investors to discuss and address these challenges in a practical manner.
The SBAI’s proposed amendments to the Standards aim to provide investors with comfort that the conflicts of interest, governance, disclosure, and subjectivity concerns in the context of private market valuations are addressed, covering topics such as valuation process and policies, related party transactions, financial statements, liquidity considerations, valuation service providers, and auditor selection.
The SBAI welcomes the opportunity to work constructively with the FCA, investment managers, and investors to improve outcomes for both investors and all market participants.
Interested parties can access our latest Consultation Paper, CP5.1/2025: Review of the SBAI’s existing Valuation Standards and proposal for addition of new Standards specific to Private Market Assets here:
We encourage industry stakeholders to get involved in our efforts at the SBAI to enhance industry outcomes and knowledge sharing between mangers and investors. We firmly believe that industry derived Standards, developed collaboratively by market participants and investors, provide the flexibility needed to address the fundamental concerns in this dynamic sector.
The SBAI is a global alliance of alternative investment managers and institutional investors dedicated to improving the alternative investment industry. Through the development of Standards, guidance, and fostering collaboration and idea exchange, we aim to drive meaningful change. Our Standards and Toolbox guidance are developed in collaboration with investors and managers, covering key areas including valuation, governance, disclosure, risk management, operational resilience, cyber security, and more. Our Standards, along with the comply-or-explain mechanism, provide a flexible complement to regulation, addressing key regulatory priorities in an efficient manner.
