21. Evaluation of investor’s contribution in joint marine industrial activity
In applied economics for the objects having complex structure, such as the marine companies, there are methodological issues of evaluation of the part, the whole, the isolated (special) and the general and with the account the definitions of the specified concepts there is a need for methodological ideas. The necessity of contribution evaluation can arise in certain expert tasks, such as: joint offshore wealth development on the basis of the contract on the production sharing, joint activity for service of the marine cargo transportations, division of the marine fishery company property, which possesses commercial fishing vessels and the quota rights for the development of ocean biological resources, etc.
The task of the contribution evaluation arises, for example, if it is necessary to estimate shares of the investors’ property. There are similar problems, in particular, in case of state–owned investment. The property share can be compensated in kind (physically) or in the monetary form.
It can be repeated, that the value for compelled sale, the resale discount, caused by the parties difficulties shifted to the seller, and external (economic) obsolescence are determined earlier (Chapter 9) by the condition of reasonable balance of seller
R1 and buyer
R2 interests, that is
R1 =
R2 .
The similar concept of a reasonable balance of interests is taken also as a basis for the concept for determination of the value of contribution in case of co–production of the asset, for example, if one party invests resources – as the offshore wealth which are the federal property, or ocean biological resources as well as the territory or water area for conducting of marine industrial activity of other kinds, and other party invests the finance or other property as a real asset of the marine company. The method of contribution evaluation is considered below. It is necessary to estimate co-investing in creation of the marine company’s property complex by two parties. The task is to evaluate the shares of investors. The offered concept of the contribution evaluation is based on the net present value
NPV division proportionally to investments if, for example, one investor, let us assume, the federal authorities, invested the right of the ocean resources development according to
MW (the development of offshore deposit, the quota for ocean biological resources development, etc.), and the second investor financed investments into the development of the ocean resources
MV_{Σ}.
The marine company’s property complex value which is generated by two participants with corresponding contributions, including the investment as a right of the ocean resources development according to
MW and total investments into their development
MV_{Σ}, is
MV, and the net present value is equal
NPV=
MV–
MW –
MV_{Σ}.
One can pay attention, that earlier (Chapter 20) there was pointed the formal conformity of the net present value
NPV and the ocean resources
MW value. At the same time under the previous formula the evaluation of the ocean resources
MW is used as data, and the net present value
NPV is determined after the deduction of the resources value
MW, and total investments
MV_{Σ} into the development of resources.
The explanation is in definition of the evaluated objects distinction, to which the net present value is related, where the difference is in a degree of object generalization.
The evaluation of the ocean resources corresponds to the investments into their development
MV_{Σ} and can be defined according to the concept of investments net present value. At the same time if to combine the right of the ocean resources development and the investment into their development, then there is another net present value that corresponds methodologically to the property complex of the specified structure and this net present value is defined below as a subject of evaluation of investors’ shares.
According to the reasonable compromise of interests (
R1 and
R2) of each of investors, when
R1 =
R2, considering, that each of efficiency indexes is equal to the ratio of the net present value of the share (
NPV1 or
NPV2) per investments (
MW or
MV_{Σ}):
R1 =
NPV1/
MW – the index of efficiency for the participant who invested in ocean resources (the right to wealth development) according to
MW;
R2 =
NPV2/
MV_{Σ} – the index of efficiency for the investor who financed the real assets for the ocean resources development
MV_{Σ},
considering, that
NPV1 +
NPV2=
NPV, it is possible to receive the system of conditions:
NPV1 / MW =NPV2/MV_{Σ} è NPV1 + NPV2=MV–MW–MV_{Σ}. |
(21.1) |
The unknown in this system are addends of the net present value
NPV1 and
NPV2. When solving of the equations system (21.1) it is possible to receive:
NPV1=NPV2×MW /MV_{Σ} è NPV2×(MW /MV_{Σ}+1)=MV–MW –MV_{Σ}. |
(21.2) |
Further
NPV1=(MV– MW –MV_{Σ}) × MW /(MW +MV_{Σ}),
NPV2 =(MV– MW –MV_{Σ}) ×MV_{Σ}/(MW +MV_{Σ}). |
(21.3) |
In the resulting ratio the net present value of the marine company’s property complex is derived between the two participants, one of which has invested the right of the ocean resources development, and the second – has financed expenses into the real assets. After distribution of the net present value between the parties the participant who invested the right of the ocean resources development according to
MW to reasonable economic interest applies for the right concerning the marine company’s property complex according to
MW +
NPV1:
MW +NPV1 =MW + (MV–MW –MV_{Σ}) × MW /(MW +MV_{Σ}), |
(21.4) |
that is the given participant applies as for the right concerning invested part
MW and the interest in additional part
NPV1. And the second investor who financed the investments into the real assets for the development of the ocean resources
MV_{Σ}, according to his reasonable economic interest, applies for the right concerning the marine company’s property complex according to
MV_{Σ}+
NPV2:
MV_{Σ}+NPV2 =MV_{Σ}+ (MV– MW –MV_{Σ}) ×MV_{Σ}/(MW +MV_{Σ}). |
(21.5) |
To evaluate the property rights of participants after the creation of the marine company’s property complex the following initial data are required: the value of the right of the ocean resources development
MW, the total value of investments
MV_{Σ} into the ocean resources development and the resultant value
MV of the marine company’s property complex.
With other number of investors the value estimation of everyone participation in the common creation of the marine company’s property complex depending on the value
MV_{n} invested by them is determined as
, |
(21.6) |
where
N – the number of investors (participants); in case of consecutive participation of investors it corresponds to a number of predicted intervals of cash flow stability or stability of rates of cash flow capitalization by the operating marine company. And the sum
MV_{n}+
NPV_{n} is equal to the investment value of the contribution
MV_{n}, and each investor’s share in the net present value accordingly is determined as
. |
(21.7) |
The formula (21.6) can be recommended for proportional division –the determination of the investment value of contribution
MV_{n}+
NPV_{n}, for example, to the manufacture of the marine company real asset, and also for evaluation of partner’s or joint–stock’s participation, the share holding, the property share in the company etc. before applying the adjustments to the value results determined by the independent methodological approaches: adjustment to the company property complex liquidity (or company share) and adjustment to controlling or non-controlling nature of share holding – for the joint–stock enterprise. To estimate the dividends
NPV_{n} it should be used the formula (21.7) with the account the specified adjustments to the values.
At first it is necessary to evaluate the marine company’s property complex
MV that is used as data in formulas (21.6 and 21.7), and also to determine the invested value of each contribution
MV_{n} separately.
Test questions
1. Purposes to which there correspond the tasks of evaluation of the contribution in marine industrial activity (the examples).
2. Concept of the contribution evaluation in case of co–production of the asset.
3. Net present value in case of joint investment of shares.
4. Indexes of investment efficiency for the parties (investors).
5. Value of the marine company’s property complex parts after division of the net present value besides the investors in proportion of investments (the formulas and the set of initial data).
6. Share of the investor in co-manufactured object (the general formula).
7. Division of the net present value to estimate dividends in joint business (the formula, adjustments).