UK watchdog urges private asset firms to improve valuation processes

LONDON (Reuters) - Britain's Financial Conduct Authority has urged firms managing private assets to improve how they identify and disclose potential conflicts of interest in valuation processes, as retail investors increase their exposure to non-public assets. 

Britain is one of the largest centres for private market asset management in Europe with global demand for private equity, venture capital, private debt and infrastructure assets soaring.

In a speech in October 2024, FCA Chief Executive Nikhil Rathi estimated global private capital assets under management had risen to more than $14 trillion, triple the volumes estimated a decade ago.

But private market assets are typically less liquid than publicly traded investment assets, such as shares, and their price movements are less transparent. This can make it more difficult for investors to track the value of their portfolios and get their money out.

Following what the FCA said was a multi-firm assessment, Camille Blackburn, director of wholesale buy-side at the body, said on Wednesday managers could do more to uncover and report conflicts and enhance processes for ad hoc valuations in times of market stress. 

Last week the FCA wrote to firms managing private assets to tell them it planned to increase scrutiny of potential conflicts of interest, to ensure investor outcomes were not compromised.

(Reporting By Sinead Cruise; editing by Barbara Lewis)