Table of contents
- Key Takeaways: IPEV Guidelines for AIF Valuation in India
- What Are IPEV Guidelines and Why Do Indian AIFs Follow Them?
- How Do IPEV Guidelines Apply to Indian AIF Categories?
- What Are the Six Core IPEV Valuation Methods?
- How Does IPEV Handle CCPS and CCD in Indian PE Deals?
- What Is IPEV Calibration and How Is It Applied?
- How Is NAV Calculated for an AIF Under IPEV?
- What Governance Framework Does IPEV Require for AIFs?
- How Does IPEV Valuation Affect Carried Interest and Fees?
- Who Can Conduct AIF Portfolio Valuation in India?
- What Documents Does an AIF Need for IPEV Compliance?
- How Is IPEV Applied in Practice?, Illustrative Case
- How Do You Select an IPEV Valuation Partner for Your AIF?
- Closing Summary: IPEV as the Foundation of AIF Governance
- Need an IPEV-Compliant AIF Portfolio Valuation?
- Get IPEV-Compliant AIF Portfolio Valuation, Certified by IBBI Registered Valuers
- Frequently Asked Questions, IPEV and AIF Valuation
📘 This is a supporting guide within the AIF & Fund Valuation cluster. For the complete framework covering all fund types, methods and regulatory requirements, read our pillar guide: AIF & Fund Valuation in India, Complete Guide.
Alternative Investment Funds, AIFs, have become the dominant vehicle for institutional private equity, venture capital and debt strategies in India. With over Rs. 15 lakh crore in commitments registered under SEBI's AIF Regulations 2012 (SEBI data, December 2025), the question of how these funds value their unlisted portfolio companies has evolved from a back-office formality into a front-and-centre governance concern. Investors, auditors, regulators and fund boards are scrutinising Valuation practices with unprecedented intensity, and the IPEV Guidelines have become the global and increasingly Indian standard for getting this right.
Unlike listed securities where market prices provide an objective anchor, unlisted portfolio companies, the bread and butter of Category I and Category II AIFs, must be valued using judgement-based methodologies. The International Private Equity and Venture Capital Valuation Guidelines, known universally as IPEV, provide the structured, principle-based framework that bridges the gap between market-observable data and the inherently uncertain value of private companies at various stages of growth. Understanding IPEV is not optional for any AIF operating in India, it is the difference between a Valuation that satisfies a Big 4 audit and one that triggers a qualified opinion, between an LP that trusts the NAV and one that demands an independent review.
At Elite Valuation, our IBBI-registered valuers work with Category I, II and III AIFs, fund managers and limited partners across India to deliver IPEV-aligned portfolio Valuation that satisfies SEBI, auditor and investor requirements in a single, defensible report.
Key Takeaways: IPEV Guidelines for AIF Valuation in India
- IPEV Guidelines are the globally recognised framework for fair value Valuation of unlisted, illiquid private equity and venture capital investments, endorsed by IVCA as India's IPEV Country Partner, mandated by SEBI's June 2023 circular for unlisted securities, and expected by auditors and institutional LPs for Indian AIF portfolio reporting
- SEBI AIF Regulations 2012 require fair value NAV reporting: IPEV provides the methodology that makes this requirement operationally defensible
- Six core IPEV methods (Price of Recent Investment, Revenue Multiple, EBITDA Multiple, DCF, NAV, and Industry Benchmark) are applied based on company stage, data availability and the nature of the investment instrument
- CCPS and CCD, the dominant instruments in Indian private equity, must be valued at the instrument class level using OPM or Current Value Method, not at the enterprise value level alone
- Calibration (back-testing the current model against the original entry price) is one of the most scrutinised steps by auditors and is non-negotiable under IPEV
- An IBBI-registered valuer (Securities and Financial Assets) delivers the independence, methodology rigour and regulatory credibility required for institutional-grade AIF portfolio Valuation
- The same Valuation cannot typically be re-used for SEBI NAV reporting and income tax purposes simultaneously: separate documentation is required for each regulatory context
What Are IPEV Guidelines and Why Do Indian AIFs Follow Them?
📌 Quick Definition
IPEV Guidelines (International Private Equity and Venture Capital Valuation Guidelines) are a globally recognised, principle-based framework for measuring the fair value of private equity and venture capital investments. Published by the IPEV Board and aligned with IFRS 13 and US GAAP ASC 820 fair value standards, IPEV provides the methodology for valuing unlisted portfolio companies where no observable market price exists. Indian AIFs are strongly encouraged to follow IPEV, it is endorsed by IVCA as India's IPEV Country Partner, expected by institutional LPs and Big 4 auditors, and mandated by SEBI's June 2023 circular for unlisted securities valuation. The market has effectively converged on IPEV as the de facto standard.
The IPEV Board, a consortium of global private equity associations including Invest Europe (formerly EVCA), BVCA, US National Venture Capital Association (NVCA) and IVCA, publishes and updates the Guidelines to reflect evolving fair value accounting standards. The December 2025 edition, the most current, supersedes the December 2022 edition and is effective for reporting periods beginning on or after 1 April 2026. It is aligned with IFRS 13 / Ind AS 113 fair value hierarchy and provides strengthened guidance on calibration, instrument-level Valuation, complex capital structures, ESG considerations, and the use of AI in Valuation processes.
For Indian AIFs specifically, SEBI AIF Regulations 2012 (Regulation 23) require that NAV be independently valued and reported to investors, at least semi-annually for Category I and Category II AIFs (extendable to annually with 75% investor approval by value), and at least quarterly for close-ended Category III AIFs and monthly for open-ended Category III AIFs. The Valuation of unlisted assets must be conducted by an independent valuer. The absence of a liquid market for unlisted investments, startups, growth-stage companies, credit instruments, means that fund managers cannot simply mark to market. IPEV fills this gap with a framework that is sufficiently structured to be auditable, yet sufficiently principle-based to accommodate the enormous diversity of private company situations encountered across a typical AIF portfolio.
📋 Regulatory Anchor: SEBI AIF Regulations 2012 (Regulation 23) require AIFs to calculate and disclose NAV based on fair value of underlying investments. SEBI Circular dated June 21, 2023 (subsumed into the SEBI Master Circular for AIFs, May 2024) mandates that the Valuation of unlisted securities held by AIFs be carried out as per guidelines endorsed by an eligible AIF industry association, currently the IPEV Guidelines, endorsed by IVCA as India's IPEV Country Partner. IPEV is not merely expected practice; for unlisted securities, it is the operative regulatory standard under SEBI's current framework.
How Do IPEV Guidelines Apply to Indian AIF Categories?
India's AIF framework under SEBI has three categories, each with distinct investment mandates and portfolio compositions. IPEV applies differently across these categories depending on the nature and stage of underlying investments.
| AIF Category | Typical Portfolio | Primary IPEV Methods Used | Valuation Complexity |
|---|---|---|---|
| Category I, Angel / VC / SME | Early-stage startups, pre-revenue companies, DPIIT-registered entities | Price of Recent Investment (PORI), Revenue Multiple, OPM for CCPS | High |
| Category II, PE / Debt / Real Estate | Growth-stage unlisted companies, structured debt, real assets | EBITDA Multiple, DCF, NAV (real assets), Yield Analysis (debt) | High |
| Category III, Hedge / Long-Short | Listed equities, derivatives; may also hold unlisted securities requiring independent IPEV-aligned valuation where applicable | Market price (listed); IPEV methods for any unlisted positions | Moderate |
| Fund of Funds | Units in other AIFs or offshore PE/VC funds | Underlying fund NAV; IPEV reassessment recommended if NAV is stale (commonly >90 days as market convention, IPEV does not prescribe a specific threshold) | Varies |
The Valuation challenge is most acute for Category I and Category II AIFs, where the bulk of the portfolio consists of unlisted companies at varying stages of development, from pre-revenue seed-stage startups to profitable growth businesses preparing for IPO or strategic exit. Each requires a different IPEV method, applied with different primary data inputs and different calibration benchmarks.
⚠️ Definition: Fair Value Under IPEV
IPEV defines fair value as the price that would be received to sell an investment in an orderly transaction between market participants at the measurement date, consistent with the IFRS 13 / Ind AS 113 definition. It is an exit price, not an entry price. The valuer's role is to estimate what a willing, knowledgeable buyer would pay for the instrument on the Valuation date, not what the fund paid for it.
What Are the Six Core IPEV Valuation Methods?
IPEV identifies six primary methodologies for valuing private equity and venture capital equity investments, plus Yield Analysis as the applicable method for debt instruments. The selection of method, or combination of methods, depends on the company's stage of development, the availability of earnings or revenue data, and the nature of the investment instrument. IPEV does not prescribe a single method, it requires the valuer to exercise judgement to identify the most appropriate technique for each investment at each measurement date.
1. Price of Recent Investment (PORI)
The transaction price of the most recent funding round is used as a proxy for fair value, but only if no material change has occurred since that round. PORI is appropriate for early-stage companies where the round was recent (typically within 12 months) and was conducted at arm's length with institutional investors. It is not a permanent anchor, it must be calibrated at each subsequent Valuation date against observable changes in business performance and market conditions.
2. Revenue Multiple (EV/Revenue)
Enterprise Value is derived by applying a revenue multiple from a set of comparable listed or recently transacted companies. Most commonly used for SaaS, technology and high-growth businesses where EBITDA is negative or early-stage. The comparable set must be carefully selected for business model similarity, geographic relevance and growth profile, and the raw multiple must be adjusted for stage, scale and liquidity discount relative to the comparables.
3. EBITDA Multiple (EV/EBITDA)
The most commonly used method for profitable or near-profitable growth companies. Enterprise Value is derived by applying a sector-appropriate EBITDA multiple to the portfolio company's maintainable EBITDA. The comparable set typically draws from listed Indian peers, recent M&A transactions in the sector, and where relevant, global comparables with a size adjustment. Normalisation of EBITDA for one-off items, founder compensation and related-party transactions is critical before applying the multiple.
4. Discounted Cash Flow (DCF)
A DCF model projects free cash flows over a 5–10 year forecast period and discounts them to present value at the weighted average cost of capital (WACC). Terminal value is calculated using a Gordon Growth Model or an exit multiple. DCF is most reliable when a company has visible, forecast-able cash flows, typically Series B or later for startups, or for asset-intensive or regulated businesses. Assumptions must be calibrated against the original entry price to ensure internal consistency.
5. Net Asset Value (NAV)
Fair value is derived from the adjusted net assets of the portfolio company, most applicable for holding companies, real estate vehicles, asset-heavy businesses and investment companies. Individual assets are marked to their own fair values, and the net asset position represents the equity value. For real estate AIFs, NAV from independent property Valuation is the primary method mandated by SEBI.
6. Industry Benchmark / Milestone Method
Used for very early-stage investments, pre-revenue, pre-product, where multiples cannot be applied and DCF is speculative. The valuer assesses whether the company has achieved the key milestones that justified the entry price (product launch, regulatory approval, first customer, etc.) and adjusts the carrying value upward or downward accordingly. This method requires the most subjective judgement and is subject to the most auditor scrutiny, detailed documentation is essential.
📌 IPEV Method Selection, Quick Reference
Pre-revenue startup: PORI + Milestone Method | High-growth SaaS / tech: Revenue Multiple | Profitable growth company: EBITDA Multiple (primary) + DCF (cross-check) | Mature business with predictable cash flows: DCF (primary) + EBITDA Multiple (cross-check) | Real estate / asset-heavy: NAV | Debt instruments: Yield Analysis / DCF on contractual cash flows
How Does IPEV Handle CCPS and CCD in Indian PE Deals?
This is where IPEV Valuation for Indian AIFs diverges most sharply from Western private equity practice, and where errors are most commonly made. In India, the dominant investment instruments in private equity and venture capital are Compulsorily Convertible Preference Shares (CCPS) and Compulsorily Convertible Debentures (CCD), rather than ordinary equity. These instruments carry liquidation preferences, anti-dilution rights and cumulative dividend features that make instrument-level Valuation materially different from enterprise-level Valuation.
⚠️ Common Valuation Error, Instrument-Level Oversight
A significant number of Indian AIF Valuations incorrectly apply enterprise value pro-rata to CCPS and ordinary equity without modelling the waterfall, the sequence in which proceeds are distributed among different instrument classes on exit. This systematically overvalues ordinary equity and undervalues senior preference instruments (or vice versa), distorting NAV and creating audit risk. IPEV explicitly requires instrument-level Valuation where the capital structure includes instruments with different economic rights.
IPEV recommends two approaches for allocating enterprise value across instrument classes in a complex capital structure:
1. Current Value Method (CVM)
The current enterprise value is distributed through the capital structure waterfall as if the company were liquidated or sold on the Valuation date. Each instrument class receives proceeds in order of its priority, debt first, then preference shares in order of seniority, then ordinary equity. CVM is most appropriate when an exit is near-term or when the company's value is close to or below the liquidation preference threshold of the preference shares.
2. Option Pricing Model (OPM)
The OPM treats each instrument class as a series of call options on the enterprise value, with break points defined by the liquidation preference and conversion thresholds of each class. Using a Black-Scholes or binomial lattice framework, the OPM distributes enterprise value probabilistically across instrument classes, accounting for the optionality embedded in preference instruments. OPM is most appropriate when the company's expected exit value is significantly above the preference threshold and exit timing is uncertain.
OPM, CCPS Instrument Value (Simplified Black-Scholes Framework)
CCPS Value = C(K₁) − C(K₂)
Where:
Inputs – Illustrative Unlisted Series A Startup:
C(K) = Black-Scholes call option value with strike price K
K₁ = Liquidation preference of the CCPS tranche (break point below this class)
K₂ = Liquidation preference threshold at which this class converts / senior class above this tranche
S = Enterprise Value on Valuation date (derived from EBITDA Multiple / DCF / PORI)
σ = Implied volatility of enterprise value (benchmarked from comparable listed companies)
T = Expected time to exit (years), typically 3–5 years for Indian PE
Illustrative Calculation:
- Enterprise Value = Rs. 500 crore (EBITDA Multiple method)
- Series A CCPS Liquidation Preference (K₁) = Rs. 80 crore
- Series B CCPS Liquidation Preference (K₂) = Rs. 200 crore
- Volatility (σ) = 45% (sector benchmark); T = 4 years
- C(80) = Rs. 438 crore | C(200) = Rs. 325 crore
Series A CCPS Fair Value = C(80) − C(200) = Rs. 113 crore
The practical implication for Indian AIF fund managers is that a single enterprise value number is not sufficient for NAV reporting, the Valuation model must explicitly allocate that enterprise value to each instrument class held by the fund, using either CVM or OPM, before the per-unit NAV can be calculated.
What Is IPEV Calibration and How Is It Applied?
Calibration is one of the most practically important, and most frequently misunderstood, requirements in the IPEV framework. It is the process by which a valuer validates their current Valuation model against the original transaction price at the time of investment, to ensure that model assumptions are internally consistent and that any changes to fair value since entry are driven by observable business developments rather than model drift.
📌 What Calibration Means in Practice
If a fund invested Rs. 50 crore for a 20% stake, the implied enterprise value at entry was Rs. 250 crore. If the valuer now applies an EBITDA multiple of 12x to current EBITDA of Rs. 25 crore, the implied enterprise value is Rs. 300 crore. Calibration requires the valuer to verify: would a 12x EBITDA multiple have reproduced the Rs. 250 crore entry value at the time of investment? If the entry-date EBITDA was Rs. 15 crore, the implied entry multiple was 16.7x, not 12x. The drop from 16.7x to 12x must be explained by specific observable factors (multiple compression in the sector, company underperformance, market conditions), not simply accepted as a model output.
In practice, calibration involves maintaining a "vintage model", a frozen snapshot of the Valuation model as at the investment date, alongside the live current model. At each subsequent Valuation date, the valuer reconciles the movement in fair value between the two models, attributing each component of value change to either business performance, market multiple movement, or assumption change. This reconciliation is reviewed by the Valuation committee and forms a key section of the auditor-facing Valuation workpaper.
Key Takeaway, Calibration Is Non-Negotiable
IPEV (December 2025 edition) strengthens expectations around calibration, requiring it at every measurement date for every investment where a transaction-based method is being used, with enhanced documentation requirements compared to prior editions. Absence of a calibration analysis is the single most common reason for auditor queries on AIF portfolio Valuation workpapers in India. An IBBI-registered valuer with IPEV experience will maintain calibration documentation as a standard deliverable.
How Is NAV Calculated for an AIF Under IPEV?
Net Asset Value (NAV) is the per-unit value of an AIF and the primary metric by which investors assess fund performance. The NAV calculation integrates the IPEV-derived fair values of all portfolio investments with the fund's other assets and liabilities.
AIF NAV Calculation, IPEV-Based Framework
NAV per Unit = (Total Assets at Fair Value − Total Liabilities) ÷ Total Units Outstanding
Total Assets:
Unlisted portfolio investments = Sum of IPEV fair values of each portfolio company (instrument-level)
Listed securities = Market price as at Valuation date
Cash & equivalents = Bank balance + accrued income
Management fee receivable / other assets = Book value (typically fair value approximates book)
Deductions:
Management fees payable = Accrued and unpaid management fees
Performance fees / carried interest = Accrued carried interest on unrealised gains above hurdle
Fund expenses = Audit, legal, administration, custody fees payable
Illustrative Example:
- Unlisted portfolio (8 companies, IPEV fair values) = Rs. 485 crore
- Listed securities (2 positions) = Rs. 42 crore
- Cash & accrued income = Rs. 18 crore
- Total Assets = Rs. 545 crore
- Liabilities (mgmt fee, carry, expenses) = Rs. 22 crore
- Net Assets = Rs. 523 crore | Units Outstanding = 52,300
NAV per Unit = Rs. 523 crore ÷ 52,300 = Rs. 1,00,000 per unit
The critical input, and the one requiring the most rigour, is the IPEV fair value of each unlisted portfolio investment. A 5% error in the Valuation of a large portfolio position can move NAV by 2–3% at the fund level, with direct implications for investor reporting, management fee calculations, carried interest accruals and, in the case of open-ended AIFs, redemption pricing.
Need an IPEV-Compliant AIF Portfolio Valuation?
Our IBBI-registered valuers deliver IPEV-aligned, SEBI-compliant Valuation reports for Category I, II and III AIFs, from individual portfolio company Valuations to full NAV certification.
What Governance Framework Does IPEV Require for AIFs?
Beyond the technical Valuation methodology, IPEV places significant emphasis on the governance structures that surround the Valuation process. For institutional-grade AIFs, particularly those with foreign institutional LPs, GIFT City structures, or large corpus, the Valuation governance framework is as important as the methodology itself. It is what auditors test, what LPs ask about in their due diligence questionnaires, and what SEBI examines in its inspections.
1. Written Valuation Policy
Every AIF must have a written Valuation policy, approved by the investment committee or board of the manager. The policy must specify: the methods used for each investment category; the criteria for method selection and change; the frequency of Valuation; the process for independent review; and the escalation procedure for contentious Valuations. SEBI expects this policy to be disclosed to investors in the Private Placement Memorandum (PPM).
2. Independent Valuation
IPEV and SEBI both emphasise independence of the valuer from the investment decision-making team. For Category II and Category III AIFs with institutional LPs, the independent valuer is typically an external firm, an IBBI-registered valuer or a specialised Valuation advisory practice, rather than the fund manager's in-house team. Independence protects against the inherent conflict of interest in a GP valuing its own portfolio at values that affect management fees and carried interest accruals.
3. Valuation Committee
The Valuation must be reviewed and approved by a Valuation committee, a body with appropriate seniority and, ideally, at least one independent member. The committee reviews methodology, challenges assumptions, approves final values and documents its deliberations in minutes. These minutes form part of the audit trail and are reviewed by auditors in the annual statutory audit.
4. Auditor-Facing Workpapers
For each portfolio investment, the Valuation workpaper must contain: method selection rationale; comparable selection and adjustment; calibration analysis; sensitivity tables; impairment assessment; and the final fair value conclusion with supporting assumptions. A well-structured workpaper reduces audit time significantly and minimises the risk of auditor queries that delay the signing of the AIF's financial statements.
Best Practice, IPEV Valuation Documentation Checklist
For each portfolio investment at each Valuation date:
- Valuation method selected and rationale documented
- Comparable companies / transactions identified and adjusted
- Calibration analysis against entry price completed
- Instrument-level allocation (OPM or CVM) if CCPS / CCD structure
- Impairment triggers assessed and documented
- Sensitivity analysis on key assumptions (EBITDA, multiple, WACC)
- Valuation committee review minutes signed
- Independent valuer certificate issued
How Does IPEV Valuation Affect Carried Interest and Fees?
The connection between IPEV-derived NAV and fund economics is direct and significant, making the rigour of the Valuation process a matter of financial consequence for both the fund manager (GP) and investors (LPs).
Management Fee Base
For many AIF structures, the management fee is calculated as a percentage of Net Asset Value, or of invested capital, which itself is a function of the Valuation. An inflated NAV increases management fee income for the GP, creating an inherent conflict of interest. Independent IPEV Valuation removes this conflict and provides LPs with confidence that the fee base reflects genuine market value.
Carried Interest Accrual
Carried interest, the GP's share of profits above the hurdle rate, typically accrues on unrealised gains in the portfolio as measured by the NAV. If unrealised gains are overstated through aggressive Valuation, carried interest is effectively front-loaded at the expense of LPs. Conversely, excessively conservative Valuation understates the GP's economic entitlement. IPEV Valuation, conducted by an independent IBBI-registered valuer, provides the neutral, defensible basis on which carried interest accruals can be calculated and disclosed.
Distributions and Equalisation
For AIFs with multiple closing dates and equalisation mechanisms, NAV at the time of each closing directly affects the equalisation amount paid by later investors to earlier investors. IPEV Valuation at each closing date ensures this calculation is performed on a consistent, fair value basis that protects both cohorts of investors.
Who Can Conduct AIF Portfolio Valuation in India?
As per SEBI Circular SEBI/HO/AFD/PoD/CIR/2023/97 dated June 21, 2023, effective from November 1, 2023, every AIF scheme must appoint an independent valuer who meets specific eligibility criteria laid down by SEBI.
Who Is Eligible to Be an Independent Valuer
The valuer must meet ALL of these conditions:
- Must be registered with IBBI, AND
- Must hold membership of ICAI, ICSI, ICMAI, or CFA Institute (OR be a holding company/subsidiary of a SEBI-registered Credit Rating Agency)
- Must have at least 3 years of experience in valuation of unlisted securities
- Must not be an associate of the AIF's Manager, Sponsor, Trustee, or Trustee Company
All the above conditions are required together. Meeting only one or two is not enough.
If an AIF Manager appoints a valuer who does not meet these conditions, the valuation does not comply with the SEBI framework, regardless of its technical quality. Responsibility for this lapse falls on the Manager, not the valuer: SEBI's framework places the responsibility for true and fair valuation on the Manager of the AIF at all times, irrespective of the policies and procedures followed. Non-compliance with SEBI's AIF valuation framework can attract regulatory action, including warnings, penalties, or restrictions, against the AIF and its Manager.
In short: SEBI does not allow an AIF to simply hire any valuer and walk away. The valuer must meet all the eligibility conditions above, and even then, the Manager remains accountable for ensuring the valuation is fair and accurate.
What Documents Does an AIF Need for IPEV Compliance?
A complete IPEV Valuation documentation set for an Indian AIF covers both fund-level governance documents and investment-level workpapers. Incomplete documentation is the most common cause of audit qualifications on AIF financial statements in India and the leading source of LP queries at the time of annual reports.
| Document | Purpose | Frequency | Status |
|---|---|---|---|
| Valuation Policy (fund-level) | Sets methodology, frequency, independence and escalation framework | Once (updated as needed) | Mandatory |
| Individual company Valuation models | IPEV fair value with method rationale, comparables, assumptions | Quarterly / semi-annual | Mandatory |
| Calibration analysis | Back-test of current model against entry transaction price | Each valuation date | Mandatory |
| OPM / CVM instrument allocation | Allocates enterprise value to CCPS, CCD and equity instrument classes | Each valuation date (if applicable) | Mandatory (if CCPS/CCD) |
| Impairment assessment memo | Documents impairment trigger review, even if no adjustment is made | Each valuation date | Mandatory |
| Valuation committee minutes | Records committee review, challenge, approval and any dissent | Each valuation date | Mandatory |
| Independent valuer certificate | Signed fair value conclusion from IBBI-registered valuer | Semi-annual (minimum) | Mandatory |
| Sensitivity analysis | Shows impact of ±10–20% change in key assumptions on fair value | Each valuation date | Best Practice |
| Vintage model (entry-date snapshot) | Frozen model as at investment date, base for calibration | Once per investment (maintained) | Best Practice |
How Is IPEV Applied in Practice?, Illustrative Case
Illustrative Case Study, Cat II AIF Portfolio Company Valuation
Scenario: A Category II AIF invested Rs. 40 crore for a 15% stake (via Series A CCPS with a 1× non-participating liquidation preference) in an unlisted B2B SaaS company in March 2024, implying an entry enterprise value of Rs. 267 crore. The Valuation date is December 2025.
Business Update: Revenue grew from Rs. 18 crore (entry) to Rs. 28 crore but missed the business plan of Rs. 35 crore. EBITDA is negative (−Rs. 3 crore) but improving. The company raised a Series B in September 2025 at an enterprise value of Rs. 320 crore.
IPEV Method Applied: Price of Recent Investment (PORI), calibrated. The September 2025 Series B round (Rs. 320 crore EV) is the most recent arm's length transaction. Calibration confirms: at entry, the implied revenue multiple was 14.8× (Rs. 267 crore ÷ Rs. 18 crore revenue). At the Series B, the implied multiple is 11.4× (Rs. 320 crore ÷ Rs. 28 crore revenue). The decline is consistent with revenue multiple compression observed in the Indian SaaS sector (−18% over the same period) and partially offset by the company's revenue growth. Calibration is supportable.
Instrument-Level Allocation (Current Value Method): At Rs. 320 crore EV, the Series A CCPS liquidation preference (Rs. 40 crore) is fully covered. The AIF's 15% stake on a fully diluted, as-converted basis = Rs. 48 crore. Since EV significantly exceeds the liquidation preference and the Series B terms indicate conversion is expected, CVM gives: CCPS Fair Value = Rs. 48 crore (15% × Rs. 320 crore).
Conclusion: Fair value of the AIF's CCPS holding = Rs. 48 crore vs. cost of Rs. 40 crore, an unrealised gain of Rs. 8 crore (20% uplift) recognised in NAV. The Valuation committee approved with full calibration documentation and auditor workpapers submitted without query.
How Do You Select an IPEV Valuation Partner for Your AIF?
Choosing the right Valuation partner for your AIF portfolio is a consequential decision, one that affects audit quality, LP confidence, regulatory standing and the efficiency of your reporting cycle. Beyond checking credentials, the following criteria determine whether a Valuation partner is fit for institutional-grade AIF work.
- IBBI registration in Securities and Financial Assets: Verify the individual signing the report is registered at ibbi.gov.in, not just the firm. IBBI registration is an individual-level credential, not a firm-level one.
- IPEV-specific experience: Ask for examples of AIF portfolio Valuation assignments, specifically CCPS / CCD instrument-level Valuations, calibration documentation, and auditor-facing workpapers. General Business Valuation experience does not automatically translate to IPEV competency.
- Auditor familiarity: A Valuation partner who has delivered workpapers accepted without material query by Big 4 and large mid-tier audit firms in India understands the practical documentation standards required. Ask which audit firms they have worked alongside.
- Reporting calendar integration: Your Valuation partner must understand your AIF's reporting calendar, quarterly vs. semi-annual NAV, LP reporting deadlines, annual audit timetable, and commit to turnaround times that do not create bottlenecks at year-end.
- Independence and conflicts protocol: Confirm that the Valuation firm does not have any financial interest in the portfolio companies being valued, does not provide investment advisory services to the same companies, and maintains a documented independence policy.
Also see our related guide on FEMA Valuation in India for cross-border AIF and GIFT City fund Valuation requirements, and Startup Valuation in India for the Valuation of early-stage portfolio companies within the AIF context.
Get IPEV-Compliant AIF Portfolio Valuation, Certified by IBBI Registered Valuers
Whether you need quarterly NAV support, CCPS instrument-level Valuation, calibration workpapers or auditor-ready Valuation certificates, our IBBI-registered valuers deliver SEBI and IPEV-compliant reports on your reporting cycle.
Closing Summary: IPEV as the Foundation of AIF Governance
IPEV Guidelines have become the operative standard for fair value Valuation of unlisted portfolios across India's rapidly growing AIF ecosystem, not merely as a matter of market expectation, but as a regulatory requirement: SEBI's June 2023 circular mandates that Valuation of unlisted securities held by AIFs be conducted as per guidelines endorsed by an eligible AIF industry association, currently the IPEV Guidelines as endorsed by IVCA. The December 2025 edition of the Guidelines, effective for reporting periods beginning on or after 1 April 2026, strengthens expectations around calibration, complex capital structures, and governance documentation. For fund managers, understanding IPEV is not an optional technical exercise, it is the foundation of investor trust, audit quality and regulatory credibility. The complexity of Indian AIF portfolios, dominated by CCPS and CCD instruments, early-stage startups, and multi-sectoral diversification, demands a Valuation partner with deep IPEV expertise, IBBI registration, and the ability to translate methodology into defensible, auditable workpapers on a consistent reporting cycle. At Elite Valuation, our IBBI-registered valuers bring precisely that combination of technical rigour and practical AIF experience to every portfolio Valuation engagement.
Frequently Asked Questions, IPEV and AIF Valuation
CA Sagar Shah, Founder
Mr Sagar Shah is the Founder of Elite Valuation and leads the firm’s Valuation and Advisory practice. With over 15+ years of professional experience.
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