Valtech’s team has completed an equity interest valuation of a PRC real estate company.
Our client previously made a capital injection into a real estate company and obtained a minority stake of the company. The major shareholder of the company agreed to repurchase our client’s stake at a pre-determined price with interest at a future date. This valuation was challenging as the PRC real estate industry faced tremendous financing difficulties during the outbreak of pandemic. Given the fact that our client’s investment was a minority interest in a private company, extensive research was required in order to make appropriate valuation adjustments.
Since the repurchase price of the equity interest and the guaranteed return to be received by our client were fixed, the investment combined the features of both debt and equity instruments. As such, adjustments on traditional valuation approach were necessary in order to cater for the characteristics of the investment. With the assistance of our in-house valuation tools, substantial amount of time and efforts were saved and those resources was allocated to other important aspects of the valuation.
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