Securities valuation is a tool for measuring the fair value of equity in a listed security or a subsidiary that is not listed or will be acquired through a listed security.
What is the definition of a security fair value?
Fair value is the value of the assets minus the value of the liabilities attributed to security.
Why do business entities evaluate securities?
Companies determine the fair value of the equity of a company or business for many reasons, such as:
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Mergers and acquisitions
- Acquiring assets or shares in a company
- Merger with another company
- New Asset Purchase Price Allocation – PPA in accordance with the International Financial Reporting Standards (IFRS 3, IFRS 13)
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Change in ownership structure
- Introducing a new shareholder/partner in a company
- Public and private offering
- Spin-offs
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Corporate restructuring
- Exit the company
- Debt financing
- Liquidation
What are the cases that require Securities Valuation?
The Capital Markets Authority “CMA” has defined, in the executive regulations, some cases that require securities valuation as follows:
| Module | Article | Valuation Requirements |
|---|---|---|
| Ninth | 2-9 and Appendix 1 item 3 | Companies intending to enter into a merger deal should seek consultancy from an independent Investment Advisor. |
| Ninth | 3-1-5 and Appendix 2 in items 4 and 10 | The offeror, if listed on the stock exchange, should seek consultancy from an independent Investment Advisor in case of a Voluntary Acquisition. |
| Ninth | 3-1-5 and Appendix 3 item 4 | The offeror, if listed on the stock exchange, should seek consultancy from an independent Investment Advisor in case of a Non-Cash Acquisition. |
| Ninth | Appendix 4, item 9 | The offeree should seek consultancy from an independent investment advisor in case of Competitive Acquisition. |
| Ninth | 3-1-5 and Appendix 5 items 3 and 8 | The offeror, if listed on the stock exchange, should seek consultancy from an independent Investment Advisor concerning the offer in case of Mandatory Acquisition. |
| Ninth | 3-1-5 and Appendix 8 item 3 | The offeror, if listed on the stock exchange, should seek consultancy from an independent Investment Advisor concerning the offer in case of Reverse Acquisition. |
| Ninth | 3-3-4 | The offeror, if listed on the stock exchange, should seek a valuation of any unlisted securities from an independent Investment Advisor. |
| Eleventh | 14-3 | Obligating unlisted companies that buy their own shares (treasury shares) to evaluate the fair value of the share price |
| Eleventh | 2-8 5-11 5-28 15-6 15-7 15-10 15-11 |
Valuation of securities in the case of issuing ordinary shares at a premium through Private Placement or Public Offering |
| Eleventh | 2-8 5-11 5-28 15-6 15-7 15-10 15-11 |
Valuation of securities in the case of issuing ordinary shares through Private Placement or Public Offering |
Do companies have to engage an investment advisor to undertake Securities Valuation engagements?
Yes, companies subject to the above articles should engage an investment advisor licensed by the Capital Markets Authority to undertake the securities assignments. Valuation.
What is the added value to business entities from undertaking Securities Valuation?
- Determining the fair value of the company’s equity, thus assisting investors or business entities in making key strategic and financial decisions.
- Attracting new potential investors.
Why Baker Tilly Kuwait?
Baker Tilly Kuwait is distinguished by specialist professional experience and offers the following characteristics carrying added value to our clients as follows:
- Baker Tilly has a license as an Investment Advisor from the Capital Markets Authority;
- A global consulting firm with a local presence in the State of Kuwait;
- Professional team with in-depth experience in providing investment consultancy services in Kuwait.
What are the services provided by Baker Tilly Kuwait?
Preparation of Securities Valuation report.