Project Finance Overview - from Inception to Financial Close
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Try Udemy for Business- Project finance
- Infrastructure finance
- Financing infrastructure deals
- Basic understanding of finance
Infrastructure Finance is not just another form of investment banking. It finances our roads and our bridges, our hospitals and our power stations. It breathes life into our economy. In this course, you will learn how infrastructure deals are financed, and what makes them so complicated. The course covers project finance structures, risk mitigation and insight from subject matter experts. The course only covers a high-level overview of project finance modelling and does not contain any project finance modelling exercises.
- Bankers
- Infrastructure financiers
- Project sponsors
- Government
- Infrastructure developers
- Project financiers
- Project finance bankers
- Infrastructure finance bankers
- EPC companies
- O&M companies
- Entrepeneurs interested in infrastructure
- Development finance institutions
What is Project Finance? What differentiates it from corporate or leveraged finance? And why does it suit infrastructure projects? Project Finance is also sometimes known as Infrastructure Finance as infrastructure is what it typically finances.
Project Finance revolves around the financing of long-term infrastructure
It is typically limited or non-recourse finance
It is therefore highly structured to ensure that risks are mitigated
Debt and Equity are paid back from cash flow generated by the project, and only this cash flow
The lenders’ recourse is limited to project assets, including performance and completion guarantees and bonds
Most large infrastructure projects are Project Financed as it enables long-term debt and separation from a company which may not be able to raise that sort of finance on their own accord
So, what do we finance? A brand new SPV.
Who am I and who are you?
Matthew is an entrepreneur, engineer, CFA® charterholder and Excel addict with a love for finance, data science, data analytics, process optimisation and building businesses. Over R4bn has been raised using financial models that Matthew has built.
Matthew has consulted to five of the largest South African banks and numerous corporates and parastatals on a number of technology, dashboard, strategy, risk, training, financial modelling and process re-engineering engagements. He has provided Excel, VBA, Data Analytics, Financial Modelling and Data Science training to some of the largest global banks. With practical insight and a broad client base, Matthew has never been rated less than 5 out of 5 for subject matter expertise. He also hosts the Financial Modelling Podcast, which has been rated as one of the top finance podcasts by the Corporate Finance Institute.
According to https://www.investopedia.com/terms/p/projectfinance.asp:
Project finance is the funding (financing) of long-term infrastructure, industrial projects, and public services using a non-recourse or limited recourse financial structure. The debt and equity used to finance the project are paid back from the cash flow generated by the project.
Project financing is a loan structure that relies primarily on the project's cash flow for repayment, with the project's assets, rights, and interests held as secondary collateral. Project finance is especially attractive to the private sector because companies can fund major projects off-balance sheet.
Project finance deals follow a process flow - from origination and project initiation to Financial Close. The process will include certain milestones such as a financial model audit, agreement on legal agreements, hedging of Forex and interest rates and credit and investment approval for debt and equity respectively. Various independent advisors will also be used throughout the process to support the deal and provide expert advice and guidance.
Project Finance deals are highly structured with many different parties, from the construction contractor to lenders. Advisors range from insurance and hedging advisors to technical advisors who will provide guidance on the technical feasibility of the solutions and plans proposed. All of these parties work together to ensure the project best meets everyone's needs, and especially the end-user of the infrastructure, whether it be the public or a private entity.