The majority of private equity sponsors (80 percent) believe the value of their portfolio investments could fall by up to 25 percent in their first quarter valuations, according to a survey conducted by private equity fund administrator Gen II Fund Services in May.
The survey also revealed a high degree of uncertainty regarding the long-term effects of COVID-19 on investments. As a result, traditional methodologies for valuing portfolio investments were seen as less reliable. Thus, sponsors are said to be considering a combination of approaches, including public company comparables, third-party valuation services and adjustments to previously applied valuation methodology.
The survey also found 70 percent of respondents believe the effects of COVID-19 will not impact their fund economics. In addition, 70 percent of respondents plan to hold investments made within the past 12 months at cost.
“The survey gives our clients important insights into how PE sponsors
