Complete Financial Modeling for Project Finance in Excel

In this lesson we will be talking about what project finance is in the context of raising capital to fund construction of infrastructure projects. We will review distinctive features of the project finance and how project finance is different from the  corporate finance.

In this lesson will explore the development of project financing method and review latest trend.

In this lesson, we will review the important financial players, that participate in project finance transaction. These include investors, which are called project sponsors in project finance. Project sponsors, as we shall see, can further be divided into industrial investors, financial investors and sometimes government may also be an investor in the project.

Lender is another financial player which participate in project finance transaction. In fact, lender make project finance possible, because, typically, a majority of construction costs are financed with debt in project finance transaction.  We shall see that due to transaction size, lenders typically unite and form a syndicate to arrange a syndicated loan to the project.

In this lesson we will explore the role of industrial players in project finance transaction. These are the companies which build the project, provide operations & maintenance service, supply raw materials and buy the product of the project company.

In this lecture, we will talk about the role of the Government and public private partnerships (PPP) in project finance. We will look at the development of PPA for power industry in the US and its effect on the PPP development. We will then review a dominant PPP form - concession agreement and its main varieties.

In this lesson, we will be looking at the risks in project finance transactions. As in any business venture, the project company in project finance faces 4 types of risks, these are project specific risks, macroeconomic risks, political risks and natural disaster risks. We will discuss these risks and see how they are allocated to the party which is best capable of managing those risks.

In this lesson, we will be looking at the capital and operating cash flows in project finance at different stages of project development. We will review the composition of project costs and project's Capex, different financing methods and forms, and important cash flows for lenders and equity investors.

In project finance, lenders usually impose strict restrictions on how the project company uses its cash. Cash movement in project company is controlled by means of control accounts and cash flow waterfall structure. In this lesson we will review these two important aspects of project finance transaction.

In this lesson we will talk about the covenants in project finance documentation. A covenant, also called an undertaking, is a promise by the borrower to the lender to do something or refrain from doing something in return for getting the loan.  Covenants appear in the loan agreement. The financial covenants are extremely important to understand for modelers, because they are part of project finance models.

In this lesson, we will review Quezon power plant case study which will show how proper risk allocation made it possible to finance construction of 800 million dollar power plant in the Philippines. 

In this lesson we will continue with Quezon Power Plant project. 

In this lesson we will review the case study which will serve as a basis for our project finance model throughout the course.

In this lesson, we will be talking about timeline development in project finance.

In this lesson we will model important dates in our project finance model.

In this lesson we will start with modeling flags in our project finance model.

In this lesson we will continue with modeling important flags in our project finance model.

In this lesson, we will introduce you to the calculation of escalation factors based on the such price index as Consumer Price Index.

In this lesson we will incorporate escalation calculations in our project finance model.

In this lesson we will review construction costs in infrastructure projects.

In this lesson we will model construction costs.

In this lesson we will model construction funding in our project finance model.

In this lesson, we will learn about the financing costs that construction debt generates. These are arranging or upfront fee, commitment fee, agent bank fee and interest during construction.

In this lesson we will model construction debt drawdowns and equity investment on pro-rata basis, and after that, we will model upfront fee and commitment fee.

In this lesson, we will continue with financing costs modeling, and will focus on agent bank fee and interest during construction modeling. After that, we will complete the modeling of sources and uses of funds.