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Presentation1 final ppt

Nov 16, 2014

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  • 1. PROJECT FINANCE

2. Presented by
3. Its All About Risk!
The key to project financing is the reallocation of any risk away from the lenders to the project.
4. WHAT IS PROJECT FINANCE ?
5. 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.
6. The financing of long-term infrastructure, industrial projects and public services.
project financing is a loan structure.
attractive to the private sector.
7. WHY PROJECT FINANCE?
8. Size and cost ofprojects
Risk minimization
May be only way that enough funds can be raised
9. FEATURE
10. 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
11. ADVANTAGES
12. Project financing is usually chosen by project developers in order to inter alia:
Eliminate or reduce the lenders 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
13. 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
14. DISADVANTAGES
15. 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.
16. TYPES
17. 18. PARTICIPANTS
19. Government
Equity Funders
Nonrecourse Debt Funders
Operator
Construction/Engineering Consultants
Affected Communities
20. Developmental projects
21. ROAD:
L&T Transportation Infrastructure Limited(L&T-TIL)
construction of a 28km bypass road
Bypass commenced in Dec.1998 and Jan.2000 respectively
22. 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).
23. 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
24. 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
25. 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

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