StatDec provides independent portfolio valuation services for buyers or sellers of retail portfolios. Determining the expected future revenue of a portfolio is what allows an asset sale to be priced appropriately.
Using broad experience in analysing retail portfolio behaviour, we select the methodology that best fits the situation and the data available, rather than forcing one method onto every transaction.
When it is needed
When a retail portfolio valuation is needed
In each of these situations it is essential to be able to quantify future cash flows from both anticipated income and likely credit losses — and, especially in the case of distressed portfolios, from recovery streams.
Merger and acquisition
As part of due diligence, where the quality and future behaviour of the retail book is a material part of what is being bought.
Sale or purchase of distressed assets
Where the value rests on the recovery stream rather than on contractual income, and needs to be estimated rather than assumed.
Preparation for the secondary market
Where a portfolio is being readied for sale and the seller needs a defensible view of what it is worth before going to market.
Method
Bottom-up and top-down valuation approaches
Valuations can be based on both bottom-up and top-down approaches, depending on the depth of information available and the accuracy required of the estimate.
Bottom-up
Bottom-up approaches require more extensive data management, but provide better estimations because they capture the portfolio dynamics based on risk criteria in greater detail.
Recovery and PD models are used, or developed for the purposes of the valuation, and results can be macroeconomically adjusted to represent scenarios on future economic conditions.
Top-down
Where information depth is limited, or the objective does not require estimation at that level of detail, a top-down approach works from portfolio-level behaviour instead.
In countries with extensive market experience of retail portfolio behaviour patterns, such as Greece and Romania, StatDec's valuations can be benchmarked against relevant portfolios — so a valuation can be enriched with expert judgement even where data is limited.
Scope of work
What the engagement covers
- Data quality and process review, to confirm that the available data represents full and concise information for the analysis.
- Identification of the key drivers of future cash flows or recoveries.
- Benchmarking expectations against reference portfolios.
- A model and/or segmentation approach for estimating portfolio cash flows, over the lifetime or a fixed time horizon.
The result is a trustworthy and independent assessment of portfolio value, from a firm with established experience and technical expertise in retail credit risk modelling. Where the underlying PD and recovery models need building or reviewing in their own right, see scorecard development and model validation.
Price the portfolio on evidence
Whether you are buying, selling or preparing for the secondary market, tell us what data exists and we will propose the approach that fits.
Get in touch