Dear CEO Letter – Valuation Practices for Private Assets

We at ISC noted with interest the contents of the Dear CEO letter issued by the FCA on 1st March 2024. The over-riding theme of the letter was around their Asset Management & Alternatives Supervisory Strategy, and it contained detail around a number of topics. It also recognised that 2023 was a difficult year for the industry in raising/maintaining assets, and that many firms had to indulge in cost-cutting and consolidation, whilst at the same time having to cope with new opportunities and increased regulation. Firm’s resources have therefore already been thinly stretched, and 2024 is likely to see a continuation of this.

One of the specific topics was that of Valuation Practices for Private Assets. The FCA expressed some concern that in the current environment of higher interest rates and a tighter credit environment, more private assets are being held within funds. Valuation practices and processes for such assets are less transparent so valuations must be proven to be appropriately governed and robust. The FCA letter says:-

“Building on the work we completed in 2023 on liquidity management, we will be conducting a multi-firm review examining valuation practices for private assets, including examining the personal accountabilities for valuation practices in firms, governance of valuation committees, the information reported to boards about valuations and the oversight by relevant boards of those practices. Again, as with other multi firm reviews, we will communicate the outcomes of this work for the benefit of all firms.”

At ISC we have significant expertise in the full life-cycle of a private assets product launch and subsequent product management and operating model definition and optimization. We are able to supply experienced resources focused on private assets within the fund management space whether supporting the BAU operations or Programme / Project Managing change initiatives.

Please contact us for further information
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