Project finance is the medium- to long-term financing of infrastructure and industrial projects based upon the projected cash flows of the project rather than the balance sheets of the project sponsors.
The predominant sectors for project finance are oil and gas, petrochemicals, mining, power, transportation and telecommunications A typical project financing structure would involve one or more sponsors (equity investors in the project company) as well as a debt package provided to the project company by a syndicate of banks and/or capital markets and/or other sources of debt.
The debt is secured by the project assets and repaid from project cash flow with only limited recourse to the project sponsors.
In recent years, project financing techniques have been used to develop public-private partnerships (PPPs) and the UK Private Finance Initiative (PFI).
Due to the complexity of project finance structures, most project sponsors engage specialist financial advisers such as CDB to develop a credit-worthy and bankable financial structure for the project. One of the key tasks of the project finance adviser is the identification and allocation of project risks.
CDB’s Asset and Structured Finance specialists can help larger businesses with very unique financing needs. We can help minimise costs such as capital gains and withholding taxes. Tailor-made products help to minimise funding costs or maximise investment returns using most forms of financial instrument including finance leasing and structured bond issues, as well as the use of equity instruments and derivatives.
Our presence in CDB’s main countries of operation gives us a global network combined with specific local expertise, allowing us to consider various legislative incentives available to encourage investment in and financing of physical and financial assets. Physical assets financed have included aircraft, real estate, ships, land transport, power facilities and infrastructure.