Unquoted Venture Investments
Unquoted venture investments are defined investments in immature companies, namely, seed, start up and early stage, until the companies stabilize and grow. They should generally be valued at cost as their market value is not available. They may, however, have to be written up (valued at higher than cost) or written down in (assigned a lower value than cost) exceptional circumstances cases.
The unquoted venture investments can be written up in cases where a third parry with arms relationship with the VCU values it at a Significantly higher value which may be taken to the value of the investment. They can also be valued at a price higher than the cost operating results are significantly higher than those projected originally. The investment may be valued using an appropriate P/E ratio and suitably adjusted discounted to account for mature of investments as well as the relatively short profit earning record of the mature. However, care should be taken while up valuing investment that the venture has started reasonable turnover and independent third party transactions have taken place.
Investments should be written down if the venture is facing long term problems requires finance or the operating results are substantially below the original projections or a third party an arms length relationship values it at less than the original cost. However. under should be revalued as early as justified.
Quoted Investments in companies which have achieved a possible exit by issues. They are valued at market quotations. In case of restrictions limitations on the a suitable discount should be applied to the market value of the shares. The rate of depend on the size and depth of the market, the period of applicability of holdings of VCIs relative to public holdings restrictions in any buy back agreement with promoters and statutory restrictions.