Project Finance Overview

Tags: Financial Management

How infrastructure deals are financed around the world

Last updated 2022-01-10 | 4.6

- Project finance
- Infrastructure finance
- Financing infrastructure deals

What you'll learn

Project finance

Infrastructure finance

Financing infrastructure deals

* Requirements

* Basic understanding of finance

Description

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 insights 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.

Who this course is for:

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

Course content

6 sections • 33 lectures

Introduction 4 lectures

Introduction to the course Preview 02:40

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? Preview 03:31

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.

What is Project Finance?

Do you know the difference between project finance and other financing structures?

What is Project Finance Podcast Preview 00:11

What is Project Finance? 5 lectures

What is Project and Infrastructure Finance? Preview 03:41

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.

Evolution of a Project Finance Deal Preview 11:32

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.

Components of a Project Finance Deal Preview 09:10

It is important to understand all of the parties in an infrastructure finance deal and what they are responsible for! An infrastructure finance deal will involve many different parties and companies, coming together to build and operate an infrastructure asset.

A Typical Project Structure Preview 04:52

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.

Interview with a construction (front-end) and Infrastructure lawyer on contracts Preview 05:51

The Nature of the Asset 3 lectures

The Nature of the Asset Preview 12:59

Interview with an Infrastructure Technical Advisor Preview 01:55

What is a Lender’s Technical Advisor, or LTA? In this interview we find out why an LTA is so important in an infrastructure finance deal.

Interview with Stefanie Bourne on technical due diligence on infrastructure deal Preview 00:13

In this podcast, I chat to Stefanie Bourne, Business Director, Renewable Energy Project Development at DNV GL. DNV GL acts as a lender's technical advisor on a number of infrastructure projects, as well as providing a myriad of other services.

The Project Finance Model 11 lectures

The Cash Flow Waterfall Part 1 Preview 02:01

Cash Flow Waterfall vs. Cash Flow Statement Preview 02:03

Complexities of the DSRA Preview 02:48

Overview of A Project Finance Model - Part 1 Preview 08:23

Overview of A Project Finance Model - Part 2 Preview 13:13

Project Finance - Finance Quiz

Modelling Infrastructure Preview 00:14

Debt sculpting is an exceptionally powerful tool to not only match debt repayments with cash flows which may be increasing or varying over time, but also to maximise the debt in a project. This podcast is the culmination of a three-part tutorial comprising of a downloadable Excel example, a Financial Modelling Podcast blog post and a podcast. Go through all three to master the art of debt sculpting!

Unlocking the Dark Art of Financial Modelling Preview 00:06

From the Financial Modelling Podcast: In this crossover episode, I chat to Andrew Ward from INFRACAST about financial modelling for infrastructure.

What is Debt Sculpting? Preview 07:01

Debt sculpting is an exceptionally powerful tool to not only match debt repayments with cash flows which may be increasing or varying over time, but also to maximise the debt in a project.

What is the Model Audit? Preview 00:03

Understanding Legal Agreements as a Financial Modeller Preview 00:16

Julie Scotto (Of Counsel at Covington & Burling LLP London) explains the key components a financial modeller needs to be aware of. Does your financial model accurately reflect the financial agreements? Julie's practice focuses on project finance and acquisitions in the energy, water, transportation and infrastructure sectors. She advises developers and lenders in Europe, the Middle East and Africa.

Project Finance Risks and Risk Mitigation 8 lectures

Overview of Project Finance Risks Preview 09:01

Risks - Key Terminology Preview 02:07

Hedging Preview 01:45

Financial Modelling Podcast - What is Hedging? Preview 00:13

Hedging is incredibly important, especially for large infrastructure projects which run the risk of being underfunded if currency and interest rates move in the wrong direction! In this episode, I chat with Lionel Kruger who provides infrastructure hedging strategies. We discuss the importance of hedging and how it is done.

https://financialmodelling.libsyn.com/what-is-hedging

Interview with a construction (front-end) and Infrastructure lawyer Preview 05:01

Interview- Derisking a Project with a Techincal Advisor Preview 04:53

Project Finance Risk Quiz

Export Credit Agency Finance Preview 00:14

Export credit agencies (also known as investment insurance agencies) enable infrastructure projects globally to be bankable. Learn how they do so in this interview with an ECA expert.