Amsterdam Center for Corporate Finance

new publication!

Understanding Fintech and PRivate Equity

Topics in corporate finance Deel 26

In the ongoing focus of the Amsterdam Center for Corporate Finance (ACCF) on the future structure of the financial sector, this issue of its series Topics in Corporate Finance is devoted to understanding Fintech and the role, scope and scale of private equity in the Netherlands with as authors professor Arnoud W.A. Boot, Professor Jeroen E. Ligterink, Associate Professor and Head of Section at the Finance Group of the University of Amsterdam and Dr Jens K. Martin (Assistant Professor at the Finance Group of the University of Amsterdam). 

The first chapter focuses on fintech. The main ingredient are developments in information technology that play a leading role in the transformation of banking. The recent focus on fintech – basically, new technology-driven players entering the financial services industry – is the latest manifestation of the impact of information technology on the industry. The focus is on the structure of the banking industry going forward. The author concludes that much uncertainty remains as fintech will lead to a disaggregation of the value chain, and will challenge the bank-customer interface at the core. The sector will need agility and flexibility to deal with the challenges ahead.

The second chapter is dedicated to the advantages and disadvantages of private equity. How should private equity be viewed? Does it play a valuable role in the economy? And what is its impact on the various stakeholders? The study focuses on buyouts. These are takeovers of mature companies (or parts of companies) by investors financed with considerable leverage (debt). Debates on this topic are often heated. The picture that emerges is a nuanced one. Broadly speaking, the authors conclude that private equity plays a positive role and is associated with value creation, but excesses do occur. Some policy measures are suggested.

The chapter is based on an extensive study recently conducted by the authors for the Dutch Ministry of Finance into the role of private equity, specifically in the Netherlands (Ligterink, J.E., J.K. Martin, A.W.A. Boot, K. Cools and L. Phalippou (2017), Private equity in Nederland, een stakeholder-perspectief, report prepared for the Dutch government, February 11).