Infrastructure Finance Models
Classic Project Finance
Infrastructure Finance Models
Infralinx has been privileged to close over $200 billion of infrastructure development investment on 4 continents as developers, lawyers, bankers and investors and are pleased to outline the lessons from our experience. We provide here a “helicopter view” of the usual finance vehicles, three specific structures now in preferred use.
Cont'd from Home Page: Business can be financed in by a number of different means, from government funding to direct investment to strategic partnerships to commercial lending to project financing to PPP to PPI to DBFMO to DBF or to combinations of these structures.
Today there is a substantial amount of equity and debt seeking good deals. The debt markets continue to be conservative in the face of project risk especially projects with commercial risk where risk mitigation is a crucial ingredient.
The classic BOT or PPP structure is a normal project financing. In its simplistic form, it has equity sponsors, debt lenders, a contractor, a design engineer, and an operator.
The key players in these complex multifaceted infra deals are sponsors, contractor/engineers, debt lenders and banks, finance institutions, multilateral institutions, lawyers, financiers, accountants and insurers and of course the relevant government officials. In the classic project financing, there are over 26 contracts involved, which allocate the rights, responsibilities, and risk allocations to the various participates.
Funding alternatives for project classically include government funding, corporate on balance sheet finance and non-recourse project finance.
Project finance investors include commercial bank, capital markets, equity funds, export credit agencies, development finance institutions, bilateral agencies, and multilateral development banks.
Funding types include: equity, debt, bank guarantees /letters of credit and performance guarantees, bank/capital markets financing, mezzanine and subordinated debt.
Credit Enhancement can come from commercial guarantee, multilateral support, letters of credit, collateral support, grants, special guarantee facilities.
Government support for financing includes:
Key issues in structuring an infrastructure project financing include:
As a result of the forgoing a couple of structural approaches to the project finance market have developed over the years, in which development we are proud to have played a central and leading role.
Below are charts of three key current frame modelds. If you would like a detailed explanation and examples, please contact
Richard Ornitz: richard.ornitz@infralinx.com.
Infrastructure Finance Models
Infralinx has been privileged to close over $200 billion of infrastructure development investment on 4 continents as developers, lawyers, bankers and investors and are pleased to outline the lessons from our experience. We provide here a “helicopter view” of the usual finance vehicles, three specific structures now in preferred use.
Cont'd from Home Page: Business can be financed in by a number of different means, from government funding to direct investment to strategic partnerships to commercial lending to project financing to PPP to PPI to DBFMO to DBF or to combinations of these structures.
Today there is a substantial amount of equity and debt seeking good deals. The debt markets continue to be conservative in the face of project risk especially projects with commercial risk where risk mitigation is a crucial ingredient.
The classic BOT or PPP structure is a normal project financing. In its simplistic form, it has equity sponsors, debt lenders, a contractor, a design engineer, and an operator.
The key players in these complex multifaceted infra deals are sponsors, contractor/engineers, debt lenders and banks, finance institutions, multilateral institutions, lawyers, financiers, accountants and insurers and of course the relevant government officials. In the classic project financing, there are over 26 contracts involved, which allocate the rights, responsibilities, and risk allocations to the various participates.
Funding alternatives for project classically include government funding, corporate on balance sheet finance and non-recourse project finance.
Project finance investors include commercial bank, capital markets, equity funds, export credit agencies, development finance institutions, bilateral agencies, and multilateral development banks.
Funding types include: equity, debt, bank guarantees /letters of credit and performance guarantees, bank/capital markets financing, mezzanine and subordinated debt.
Credit Enhancement can come from commercial guarantee, multilateral support, letters of credit, collateral support, grants, special guarantee facilities.
Government support for financing includes:
- Funded products
- Contingent products
- Financial intermediaries
- Project development funds
- European Union funds
Key issues in structuring an infrastructure project financing include:
- Certainty of the revenue stream
- Financial revenues and covenants ie
- Debt-equity ratio
- Loan life cover ratio
- Debt service cover ratio
- Rate of return
- Weighted average cost of capital
- Lender protection, step in Rights, direct agreement, security, termination.
As a result of the forgoing a couple of structural approaches to the project finance market have developed over the years, in which development we are proud to have played a central and leading role.
Below are charts of three key current frame modelds. If you would like a detailed explanation and examples, please contact
Richard Ornitz: richard.ornitz@infralinx.com.
