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Project Finance Modelling Overview

This document discusses project finance modeling and analysis. It defines finance and accounting, and outlines the key skills required for a finance professional, including analysis, decisiveness, and mathematical expertise. It then defines project finance as the funding of long-term infrastructure projects using non-recourse or limited recourse debt paid back from project cashflow. It provides 20 related project finance terminologies and discusses how non-recourse loans work as well as mezzanine financing. Finally, it outlines sectors that are well-suited for project financing, such as construction, mining, energy, and highways, as they require large investments but lack high-value collateral.

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DILIP KUMAR
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22 views3 pages

Project Finance Modelling Overview

This document discusses project finance modeling and analysis. It defines finance and accounting, and outlines the key skills required for a finance professional, including analysis, decisiveness, and mathematical expertise. It then defines project finance as the funding of long-term infrastructure projects using non-recourse or limited recourse debt paid back from project cashflow. It provides 20 related project finance terminologies and discusses how non-recourse loans work as well as mezzanine financing. Finally, it outlines sectors that are well-suited for project financing, such as construction, mining, energy, and highways, as they require large investments but lack high-value collateral.

Uploaded by

DILIP KUMAR
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

PROJECT FINANCE- MODELLING AND ANALYSIS

A. Finance is defined as the management of money and includes activities


such as investing, borrowing, lending, budgeting, saving, and forecasting.

Finance deals with the questions of how and why an individual, company or
government acquires the money needed - called capital in the company
context - and how they spend or invest that money.

Accounting is keeping track of transactions made during receiving and


spending. This is the core difference between the finance and accounting.
The basic points required to pursue a career in finance

Skills Required for a finance professional :

1. Analysis
2. Decisiveness
3. Persuasiveness
4. Interpersonal and communicational Skills
5. Mathematical Expertise

Project finance: Project finance is the funding of long term


infrastructure, industrial projects and public services using a non
-recourse and limited recourse financial structure . the debt and equity
used to finance the project are paid back from the cashflow generated by
the project .

Project finance in simple words, financing the project on non-course


financial structure whereas the corporate finance is financing the
corporate based on their financial statements and taking collateral
(security) as their assets.
20 terminologies related to project finance
1. Amortisation
2. Advance payments
3. Annuity
4. Commissioning
5. Contingency
6. Concession agreement
7. Deficiency agreement
8. Financial close
9. Feasibility study
[Link] Operate Transfer (BOT)
[Link] capital
[Link] to value ratio
[Link] contract
[Link]-Bid-Build (DBB)
[Link]- Private partnership (PPP)
[Link] currency
[Link] Operating Agreement (JOA)
[Link] Risk
[Link] Funds
[Link]

A. Non- recourse loan is a type of loan secured by collateral. which is


usually property. I the borrower defaults the issuer can seize the collateral
but cannot seek out the borrower for any further compensation even if the
collateral doesn’t cover the full value of the defaulted amount. Non
recourse are harder to obtain and qualify for because he lender takes the
majority of Risk

Mezzanine Financing :mezzanine financing is a hybrid of debt and


equity financing that gives the lender the right to convert to an equity
interest in the company in case of default
Project finance suits:
The sectors or a project which suits the project finance
are construction of high valued buildings, mining industry, entertainment
industry like sports and other possible activities, energy industry,
highway development projects. These are suitable because these require
high amount of investment and no such high valued collaterals can be
sourced as securities, thus project finance is the only way to finance the
project and also get the repayment from the cash generated from the
project.

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