MANAGEMENT REPORT
DIRECT PORTFOLIO VALUATION
Luxempart's first strategic pillar is to invest in Direct
Investments, with a particular focus on private compa-
nies. As of 31 December 2024, private equity investment
represents 54.6% of the NAV.
Valuation lies at the core of our investment approach.
Accurate valuation is essential for making informed invest-
ment decisions, facilitating M&A transactions, securing
external financing, and ensuring sound strategic planning.
However, valuing a private company is inherently complex
due to the absence of publicly traded stock prices, mak-
ing it more challenging to determine its fair market value.
This is why Luxempart has long established robust valu-
ation processes and methodologies to ensure compliance
with regulatory and accounting standards. These processes
are also critical for making investment decisions, secur-
ing fair pricing in M&A transactions, and optimizing port-
folio management.
Our semi-annual portfolio valuation follows a well-struc-
tured process at Luxempart. It starts with gathering the
most reliable profit and loss and balance sheet data from
our portfolio companies, primarily using last twelve
months (LTM) aggregates, sometimes supplemented with
forward-looking elements to account for highly probable
future developments. Once audited financial information
becomes available, our portfolio data is back-tested for
accuracy.
While all valuation models share a common foundation,
they are tailored to the specific characteristics of each
portfolio company from the date of acquisition. This prin-
ciple, known as "calibration," minimizes subjective judg-
ment, ensuring the most objective valuation models pos-
sible and reducing sources of estimation uncertainty. As
part of this process, appropriate discounts for illiquidity
are applied, typically ranging from 10% to 30%, reflect-
ing the marketability constraints of private investments
and further enhancing the robustness of the valuation
approach. Each model is linked to a market data provider
(S&P Capital IQ), which automates the integration of mar-
ket data at each valuation date.
After the investment team establishes the valuation, the
model, results, and documentation undergo a rigorous mul-
ti-level review process. This involves discussions within
the investment team—our best experts on the company
and its market—followed by reviews with the GEC mem-
ber in charge, the business control manager specialized in
valuation, the CFO, the entire GEC, and the Audit, Compli-
ance, and Risk Committee. Additionally, valuation models
and supporting documentation are reviewed as part of
the financial statements external audit. In addition, every
year, we voluntarily engage an external expert to con-
duct an in-depth review of one or more valuation mod-
els, further reinforcing our commitment to rigorous val-
uation practices.
At the time of an exit, the final sale price provides an
opportunity to back-test our valuation methodology. Our
observations show that, in most cases, the sale price
closely aligns with the latest estimated valuation and is
never significantly lower. In some instances, however, the
final price exceeds our valuation, particularly when nego-
tiations allow us to secure higher multiples. This consist-
ency reinforces the robustness of our valuation approach
while demonstrating our ability to capture upside poten-
tial in favourable market conditions.
Our valuation process is fully aligned with IPEV guide-
lines and IFRS 13. It is transparent, consistent over time
and rigorously applied to ensure reliability, objectivity,
and comparability across valuations, providing stakehold-
ers with a clear and robust assessment of our portfolio's
value. Valuation principles are detailed in Note 2 of the
financial statements, while valuation techniques, signif-
icant unobservable inputs, and sensitivity analyses are
disclosed in note 10.
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LUXEMPART ANNUAL REPORT 2024
