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 2025, private equity represents
57.6% of the NAV.
Valuation lies at the core of our investment approach.
Accurate valuation is essential for making informed
investment decisions, facilitating M&A transactions,
securing external financing, and ensuring sound stra-
tegic planning. However, valuing a private company
is inherently complex due to the absence of publicly
traded stock prices, making it more challenging to deter-
mine its fair market value.
This is why Luxempart has long established robust valua-
tion processes and methodologies to ensure compliance
with regulatory and accounting standards. These pro-
cesses are also critical for making investment decisions,
securing fair pricing in M&A transactions, and optimizing
portfolio 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
principle, known as "calibration," minimizes subjective
judgment, ensuring the most objective valuation models
possible and reducing sources of estimation uncertainty.
As part of this process, appropriate discounts for illiquidity
are applied, typically ranging from 10% to 30%, reflecting
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
market data at each valuation date.
After the investment team establishes the valuation, the
model, results, and documentation undergo a rigorous
multi-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 member responsible, the business control manager
specializing in valuation, the CFO, the entire GEC, and
the Audit, Compliance, 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 conduct an in-depth review of
one or more valuation models, further reinforcing our
commitment to rigorous valuation 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
negotiations allow us to secure higher multiples. This
consistency reinforces the robustness of our valuation
approach while demonstrating our ability to capture
upside potential 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 stake-
holders with a clear and robust assessment of our port-
folio's value. Valuation principles are detailed in Note 2
of the financial statements, while valuation techniques,
significant unobservable inputs, and sensitivity analyses
are disclosed in Note 5.
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LUXEMPART ANNUAL REPORT 2025
MANAGEMENT REPORT
