Fundamentals of Project Finance
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Fundamentals of Project Finance Course
Introduction:
Project finance involves obtaining funding for long-term infrastructure projects, industrial ventures, and public services through a financial structure that limits the recourse to the project itself rather than the sponsor's balance sheet.
It encompasses a comprehensive financial analysis of the entire life cycle of a project. A cost-benefit analysis is typically conducted to assess whether the economic benefits of a project outweigh its economic costs.
The International Faculty of Finance has developed a specialized course that offers a detailed examination of the project financing process. The course places particular emphasis on financing term sheets and documentation, providing participants with a comprehensive understanding of the intricacies involved.
Through a combination of case studies, group discussions, and interactive learning, delegates will delve into the contemporary challenges faced in project financing. They will have the opportunity to apply the skills and knowledge they acquire during the course to real-world scenarios and engage in collaborative discussions with their peers.
By attending this course, participants will enhance their proficiency in project finance and gain valuable insights into the complexities of financing large-scale projects. They will develop the skills necessary to analyze term sheets, assess risk factors, and navigate the documentation involved in project financing.
Ultimately, this course equips professionals with the expertise required to effectively manage and execute project financing initiatives. They will be well-prepared to address the challenges that arise in this specialized field and contribute to the successful implementation of infrastructure and industrial projects.
Course Objectives:
At the end of this This Fundamentals of Project Finance training course you will able to:
- Analyze why and when sponsors use project financing techniques
- Widen your understanding of the project finance techniques and the jargon used
- Examine of the key sources of limited-recourse debt
- Appreciate of the lender’s approach to risk
- Understand how key risk factors drive structure and loan pricing Learn how project models are built and used to balance equity against debt
- Appreciate how project models are used to optimize debt amounts, maturity and re-payment
Who Should Attend?
The Fundamentals of Project Finance Courses will be valuable to professionals in the following areas:
- Bankers/Investment Bankers
- Project Finance Modelers
- Financial Advisors
- Sponsors/Project Joint Ventures
- Project Developers
- Government/PPP Agencies
- Public Sector Managers
- Export Credit Agencies
- Multilateral Agencies
- Accountants/Taxation Advisers
- Financial Analysts
- Share market Analysts/Brokers
- M&A/Buyout Specialists
- Privatization Executives
- Company Treasurers/Directors
- Credit Committee Staff
- Rating Agencies
- Project Managers/Engineers
- Project Consultants
- Investment/Portfolio Managers
- Insurance Advisers/Brokers
Course Outlines:
What is Project Finance?
- Definition – “Project Finance” as opposed to financing of a project
- Limited-recourse and non-recourse finance
- Origins of project finance
- Who uses project finance and why?
- What is the downside?
The Project Finance Process
- The Players and their interests
- Ownership structures
- Key project contracts
- Role of advisers:
- The financial feasibility study/debt structuring
- The information memorandum
- Debt underwriting/syndication
- Financial close
- Post-close monitoring
Sponsors and Lenders/ The Lender’s Risk Analysis
- Different risk/reward objectives of sponsors and lenders
- Balancing equity and debt
- Different types of debt – senior/ subordinated/mezzanine
- Structural & pricing drivers
- Key ratios – annual debt service, loan life and project life covers
- Balancing equity and debt
- Assessing the Risks
- Macro risks
- Completion risk
- Operational risk
Other Sources of Debt Finance / Risk Mitigation
- The bond markets
- Credit enhancement through guarantees
- Islamic finance
- Private political risk insurance market
- Export credit agencies
- Multilateral agencies/development banks
- Sponsor co-financing
Project Financing Documentation
- The term-sheet – purpose, legal status, binding/non-binding aspects
- Term-sheet/documentation provisions:
- Term-sheet interactive exercise
- Legal opinions
- LMA standard terms
- Security and credit rights
- Payment waterfall
- Collateral and assignment of contract rights
- Rights of the controlling classes, inter-creditor issues
- Reserve accounts, cash sweeps, profit distribution controls
- Refinancing risk
- Project types
- Conclusion