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A user of Asset Lenz can build a portfolio based on a single currency of deals previously modelled in the “Private Deal Models” tab. Only users logged into the platform can access portfolios within an organization. On the “Portfolios” tab, the user is able to see all of the deals they have access to within their organization.
The portfolios functionality can be simply expressed by taking all of the deals that make up the portfolio, running them in parallel and aggregating all of their respective outputs to form the single output of the portfolio.
The aggregation to form the portfolio is done by taking the weighted sum. In other words, for each deal (denoted as “Asset” in expressions below which means the investment or equity in a deal), all of its outputs are calculated then being multiplied by the weighted NAV (see expression for weighted asset NAV for a portfolio, “Ptf”):
$$ NAV_{Ptf} = \sum ({NAV_{Ptf}} \times {Weight_{Asset_{i}}}) \space, \space {where \space Weights \space sum \to 100 \% } $$
Or in other words, the NAV of the asset will be:
$$ NAV_{Asset_{i}} = {NAV_{Ptf}} \times {Weight_{Asset_{i}}} \space, \space {where \space {Weight_{Asset_{i}}} \space \le 100 \% } $$
With the asset or deals share of portfolio NAV (i.e., what is shown in the above equation), all the metrics in the deals can be prorated to form the aggregate portfolio. For instance, if the user wishes to aggregate the portfolios underlying leverage, Asset Lenz can take the portfolios’ share in each deal and aggregate it to get a top of the house view with projections. The mathematical expression for that is as follows:
$$ Debt_{Portfolio} = \sum (\frac{NAV_{Asset_{i}}}{NAV_{Deal}} \times {Debt_{Asset_{i}}}), \space {where \space {NAV_{Asset_{i}}} \space \le \space {NAV_{Deal}} } $$
Although the above expression concerns debt or leverage, all line items are aggregate using the same methodology as the deal models are standardized objects. For the sum of similar items across deals (i.e., different investments), the keys reserved for revenue, expenses, taxes, interest expense etc. should be shared and identically for the aggregation to happen as intended. In others words, if two businesses with the same lines of revenue are in a portfolio, for their revenues to added to one another at the portfolio level, they will need to be given the same key.