Valuation of AIF’s investments

Standardised Approach to Valuation of AIF Portfolio

The creation of the IVCA Guidance Note on Valuation was significantly influenced by the endorsement of the International Private Equity and Venture Capital Valuation (IPEV) Guidelines, following recommendations from the Alternative Investment Policy Advisory Committee (AIPAC).

AIPAC Recommendation and SEBI Circular:

On June 21, 2023, the Securities and Exchange Board of India (SEBI) issued a circular standardizing the valuation approach for Alternate Investment Funds (AIFs). This circular mandated that valuations be conducted as per guidelines endorsed by an AIF industry association representing at least 33% of SEBI-registered AIFs. The endorsement process was based on recommendations from the AIPAC, ensuring alignment with global best practices.

IVCA's Role as India's Representative Association:

The Indian Venture and Alternate Capital Association (IVCA), recognized as the largest representative association for AIFs in India, was tasked with endorsing appropriate valuation guidelines. Acting on AIPAC's recommendation, IVCA officially endorsed the IPEV Guidelines, reflecting its commitment to promoting transparency, consistency, and global best practices in valuation within India's alternative investment industry.

Recognition as Country Partner for IPEV:

As part of this initiative, IVCA was acknowledged as the country partner for India by IPEV. This recognition positioned IVCA as a key entity responsible for adapting and implementing these globally accepted guidelines in India.

Development of an India-Tailored Guidance Note:

Following its endorsement of the IPEV Guidelines, IVCA engaged extensively with relevant stakeholders—including fund managers, valuers, regulators, and industry experts—to create a tailored guidance note. This document adapted the IPEV principles to address unique challenges faced by Indian private equity and venture capital firms, including diverse investment stages, complex capital structures, and evolving market dynamics.

The resulting IVCA Guidance Note on Valuation serves as a critical resource for ensuring consistent valuation practices that align with both international standards and local market realities.