Presentation is loading. Please wait.

Presentation is loading. Please wait.

Presented by… WHAT IS PROJECT FINANCE ? Project Finance involves a corporate sponsor investing in and owning a single purpose, industrial asset.

Similar presentations


Presentation on theme: "Presented by… WHAT IS PROJECT FINANCE ? Project Finance involves a corporate sponsor investing in and owning a single purpose, industrial asset."— Presentation transcript:

1

2

3 Presented by…

4

5 WHAT IS PROJECT FINANCE ?

6 Project Finance involves a corporate sponsor investing in and owning a single purpose, industrial asset through a legally independent entity financed with non-recourse debt.

7 The financing of long-term infrastructure, industrial projects and public services. project financing is a loan structure. attractive to the private sector.

8 WHY PROJECT FINANCE?

9 Size and cost of projects Risk minimization May be only way that enough funds can be raised

10 FEATURE

11 It is provided for a “ring-fenced” project There is a high ratio of debt to equity There are no guarantees Lenders rely on the future cash flow The main security for lenders

12 ADVANTAGES

13 Project financing is usually chosen by project developers in order to inter alia: Eliminate or reduce the lender’s recourse to the sponsors Permit an off-balance sheet treatment of the debt financing Maximize the leverage of a project Reduce political risks affecting a project

14 Circumvent any restrictions or covenants binding the sponsors under their respective financial obligations Avoid any negative impact of a project on the credit standing of the sponsors Obtain better financial conditions when the credit risk of the project is better than the credit standing of the sponsors

15 DISADVANTAGES

16 Often takes longer to structure than equivalent size corporate finance. Higher transaction costs due to creation of an independent entity can be up to 60bp Project debt is substantially more expensive (50-400 basis points) due to its non-recourse nature. Extensive contracting restricts managerial decision making. Project finance requires greater disclosure of proprietary information and strategic deals.

17 TYPES

18

19 PARTICIPANTS

20 Government Equity Funders Nonrecourse Debt Funders Operator Construction/Engineering Consultants Affected Communities

21 Developmental projects

22 1)ROAD: L&T Transportation Infrastructure Limited(L&T-TIL) construction of a 28km bypass road Bypass commenced in Dec.1998 and Jan.2000 respectively

23 2)AIRPORT: Bangalore International Airport Limited (BIAL) project covers construction of a 4000m runway expected traffic demand of 4.1 million passengers per year investment will be US$240 million (Rs.1240 crores).

24 3)BRIDGE : Narmada Infrastructure Construction Enterprise Limited (NICE) The construction of a 1.4km-long bridge adjacent to the first bridge & 4.6km of approach roads Service began in nov. 2000

25 4)TRADE & EXHIBITION CENTRE: Hyderabad International Trade Expositions Limited (HITEX) developed on a 100-acre plot eight air cooled halls of 3500 Sqm each of indoor an open exhibition space (32,825 Sqm) conference rooms of a total area of 4553 Sqm

26 5)WATER SUPPLY PROJECTS Vizag Industrial Water Supply Company Limited (VIWSCO) Pipeline works from Rajahmundry to YLBC 56 km Concession period for the project is 32 years

27

28


Download ppt "Presented by… WHAT IS PROJECT FINANCE ? Project Finance involves a corporate sponsor investing in and owning a single purpose, industrial asset."

Similar presentations


Ads by Google