The effects of Basel III on Private Equity financing

The implementation of the new Basel capital accord, referred to as Basel III, throughout the next few years is believed to affect the worldwide banking business. Subsequently, other market players such as small- and medium-sized enterprises (SMEs) will be equally concerned. As the availability and attractiveness of bank loans may decrease due to Basel III, alternative forms of financing such as Private Equity (PE) may benefit from a higher demand. The qualitative empirical study, based on seven problem-focused interviews with Austrian industry experts in different areas, captures prevalent expectations within the Austrian market and examines possible future developments. The results suggest an increased demand of Austrian SMEs for PE capital due to Basel III. Simultaneously, the supply of PE is expected to decrease in future years as a result of lower fundraising volumes. However, due to other current extensive changes in the market, it is at present, not possible to evaluate the combined effects of both developments.

Autorentext

Jacek GÖRAL, M.A. graduated with distinction in Strategic Mgmt. from the University of Applied Sciences Wr. Neustadt. He is currently finishing his Corporate Finance degree at the University of Vienna. While studying, he completed semesters abroad in Paris and Sydney, carried out several finance-related internships and ran his own business.