Course description
Project Finance - Introduction
This intensive three day course aims to provide an overall view of the concepts and approach used in structuring and arranging project finance transactions for major infrastructure schemes in the UK and overseas. The course takes participants through risk analysis and risk management techniques, develops a project appraisal methodology, demystifies the language and approach of financiers and transfers an understanding of the drivers, approaches and concerns of the key players involved in creating and financing major projects. A special focus will be on finance and the tools to value a project. The course will be interactive and will include many exercises and case studies. No prior knowledge of project finance or finance is assumed.
Do you work at this organisation and want to update this page?
Is there out-of-date information about your organisation or courses published here? Fill out this form to get in touch with us.
Suitability - Who should attend?
This course will be of benefit to those working within, or intending to move into, project development or project finance areas. Previous participants have included engineers, bankers, accountants, lawyers and middle/senior managers in utility companies, commercial banks, consultancy and law firms.
Outcome / Qualification etc.
Learning outcomes include obtaining a greater understanding of:
- Introduction and overview of Project Finance
- Definition of Project Finance
- ’Project Finance’ as opposed to ‘Financing of a project’
- Limited recourse and non-recourse finance
- Main features of Project Finance
- Parties involved – interests and roles
- Importance of cash flow
- Documentation – what are the aims?
- Project development process
- Why choose Project Finance?
- Project Finance Market
- Origin and evolution of Project Finance
- Project Finance figures: Europe, Americas, Asia & Pacific, Africa & Middle East
- Oil & gas, Power, Infrastructure, Mining, Telecom
- The main parties in Project Finance
- Parties involved – interests & roles
- Project company/borrower
- Sponsors/shareholders
- Banks
- Multilateral & export credit agencies
- Insurers
- Construction companies
- Operator
- Host government
- Risks & Mitigants
- Understanding the risk allocation
- Country & political risks
- Environment risks
- Construction risks
- Offtake-sales & supply risks
- Contractor risks
- Operator risks
- Funding risks
- Foreign Exchange – currency & interest rate risks
- Credit Analysis by the Lenders
- How do lenders assess projects?
- Assessing credit worthiness
- Getting started with Credit
- Business/Commercial Risk
- Risk evaluation framework – developing a methodology
- Macro-Country-Political
- Industry Products/market suppliers / contracted purchases
- Project Production facilities/infrastructure/Technical/contractors
- Management – Project’s Sponsors
- The Financial Statements
- Balance Sheet & Leverage
- Income Statement & Cash Flow
- Ratios Ratings
- Advanced Cash Flow Analysis
- Net Operating Cash Flow
- Free Cash Flow
- Discounted Cash Flow
- Structuring a Project Finance
- Cash Flow Analysis
- What do we want from a model?
- Repayment profiles and coverage ratios
- Key management concerns with models
- Key Project Finance Ratios: Sponsor’s Perspective
- Investors – gearing benefits
- IRR – The Internal Rate of Return
- NPV – The Net Present Value
- Key Project Finance Ratios: Lender’s Perspective
- CADS – Cash Flow Available for Debt Service
- DSCR – Debt Service Cover Ratios
- PLCR – LLCR – Project and Loan Life Cover Ratios
- Financial Projections
- Why are the financial models used?
- Volatility
- What is the project and why should it take place?
- What are the key operating assumtions?
- The Financial Modelling Assumptions:
- Construction Cost
- Operation: revenue, expenses, taxes
- Financing: Debt/Equity
- Cash Flow: CADS-DSCR / NPV-IRR
- The Projection Cases
- Appropriate Debt & Equity Financing
- The Documentation
- Shareholder/sponsor arrangements
- Project Documents
- Legal & structuring issues
- Seniority, Senior Debt, Junior Debt, Equity
- Cash Flow Waterfall
- Guarantees/Securities/Covenants
- Loan Documentation