Infrastructure Project Finance
A 3 – day workshop to provide participants with an enhanced understanding of the financing and structuring of Infrastructure transactions focussing on:
- Options for Public Sector Users;
- The response of governments to the credit crisis
- Objectives of the parties involved both from a Public and Private Sector perspective;
- Risk and return requirements;
- Key financial sensitivities
- Debt finance and implications of the credit crisis
- The role of Infrastructure Funds
- Factors influencing the choice of Corporate or Project Finance;
- Capital structuring decisions
- Valuation issues for Infrastructure projects and companies
- Some critical aspects of debt financing documentation
Course dates
The financing of infrastructure represents a major opportunity and challenge given the scale of potential infrastructure development as a result of. Traditional methods of financing infrastructure projects are no longer sufficient to finance Infrastructure projects, leading to increased use of Public Private Partnerships, and development of Infrastructure Funds as potential sources of funds. There has also been a change in approach in recent years about "risk sharing", "accountability" and "Value for Money" resulting in changes in how services for how services to public sector users are procured and performance evaluated.
This programme will provide participants with a sound understanding of the key issues in Infrastructure finance so that they can develop a clear understanding of the factors influencing the choice of financing methods for infrastructure projects; the motivations of the parties involved; risk evaluation and allocation; capital structuring issues; and lessons from the past
How will this course assist you ?
This 3-day workshop will provide participants with an enhanced understanding of the financing and structuring of infrastructure transactions focusing on:
- Options for Public Sector Users;
- The response of governments to the credit crisis
- Objectives of the parties involved both from a Public and Private Sector perspective;
- Risk and return requirements;
- Key financial sensitivities
- Debt finance and implications of the credit crisis
- The role of Infrastructure Funds
- Factors influencing the choice of Corporate or Project Finance;
- Capital structuring decisions
- Valuation issues for Infrastructure projects and companies
- Some critical aspects of debt financing documentation
- Ageing infrastructure in many developed economies
- Need for infrastructure in many developing economies to support economic growth
- Attempts by governments and supranational agencies to mitigate the impact of the credit crisis by accelerating spending on infrastructure projects
Who should attend?
All professionals involved in infrastructure finance from across government and government agencies, project sponsors, contractors, financial institutions including multilaterals and export credit agencies, as well as consulting and advisory firms.
- Head of Project Finance
- Head of Corporate Finance
- Head of Structured Finance
- Treasurer
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Project Manager
- Accountant
- Analyst
- Sales Manager
DAY 1
Introduction
Issues for Government in the financing of Infrastructure
Budgetary issues
Sector Restructuring
Options for the financing of public sector infrastructure assets – from operating contracts to privatization
Terminology and Definitions (BOOT, PPP, IFI, IPP, PPA, etc.)
PPP Principles
Basic concepts of non or limited recourse Project Finance (vs Corporate Finance)
Different structures and degrees of private participation
Contract services: Operations and Maintenance (O&M), O&M and Management, Affermage contracts
Leasing, Lease Develop Operate (LDO), Lease Purchase, Sale Leaseback
Design Build (DB), DBM, DBO, DFBO, BOT, BOO and Concession Contracts.
Privatization
Value for Money in the procurement of public sector services vs political and social issues
Ownership vs use of Public Sector assets
Policy, Legal and regulatory environment
Case study: working in groups, participants are given background on an Infrastructure sector and make their recommendations on the most appropriate approach to the financing of the sector
Key players in an Infrastructure Finance
Roles and objectives of the parties to an Infrastructure Finance
Potential conflicts of interest and potential differences in Public Sector and Private Sector objectives
Exercise: review of an Infrastructure project to illustrate the role of the various stakeholders and potential conflicts of interest; review of background of a company actively involved in Infrastructure transactions to evaluate their approach to infrastructure Finance
Risk identification and lessons of experience
Risk areas
Macroeconomic factors
Political risks & role of the government
Construction
Operational and management
Environmental considerations
Consultants in the PPP process
Counterparty risks
Inflation
Devaluation
Interest Rate
Legal
Lessons of experience
Mega projects and risk - lessons from the transportation sector including the London Underground, road concessions and the power sector
The infrastructure boom and impact of the credit crisis in terms of risk assessment, growth assumptions and corporate valuations
Exercise: Rating an Infrastructure project - participants are given background on an Infrastructure project and develop a rating
Risk mitigation and allocation
How are risks typically allocated?
Guarantees and credit enhancement
Cashflow enhancement – use of offtake contracts
Guarantors
Guarantees vs insurance
Construction related enhancements – bid, advance payment and performance guarantees
Role of credit insurers and impact of the 2007 “credit crisis”
Exercise: participants are given background on an Infrastructure Finance and looking at the transaction from either an investor or User perspective negotiate key aspects of the risk allocation
DAY 2
Reviewing business plans for Infrastructure projects
Are the assumptions realistic?
Peer group analysis
Identifying and sensitising key financial risks in a PPP transaction
Cashflow related ratios
DSCR
LLCR
Exercise: participants assess the viability of the assumptions in support of a port project and review and sensitise the financial model to establish the potential viability of the project and key influences on the project
Analysing credit risk of sponsors involved in Infrastructure Finance
Different elements of cash flow
EBITDA
Cash from operations
Cash available for Debt Service
Free cashflow
Cash available to equity investors in a Project Finance structure
Financial analysis of corporates involved in Infrastructure projects
Quantitative indicators and typical ratios used in financial analysis
Qualitative factors
Project vs Corporate related cashflow analysis
Exercise: participants review the financial statements of a corporate investing in Infrastructure Finance as a basis for assessing their financial strength as an operator of Infrastructure projects
Debt financing issues
Impact of the “credit crisis” on the debt markets for Infrastructure projects
Corporate Finance vs Project Finance issues
Debt vs Equity
Leverage objectives
Loans vs bonds
Potential involvement of various financial institutions / instruments and influencing factors
Development Finance Institutions
Export Credit Agencies
Commercial Banks
Leasing
Capital Markets
Local vs foreign currency finance
Senior vs subordinated debt
Interest and currency exposure management
Review of selected PPP transactions, both Corporate and Project Finance funded, to illustrate the debt financing structure.
Exercise: working in teams, participants review and develop of a summarized debt financing term sheet for an Infrastructure Finance transaction
Central London Hotel, London, United Kingdom
This programme takes place on a non-residential basis at a central London hotel. Non-residential course fees include training facilities, documentation, lunches and refreshements for the duration of the programme. Delegates are responsible for arranging their own accommodation, however, prior to the course the delegate will receive full Joining Instructions which will detail how to book accommodation close to the training venue. Alternatively delegates can visit www.euromoneytraining.com/accommodation to view a list of preferred hotels in Central London.
As with all Euromoney Training programmes on-site administrators will be with you at the beginning of the programme to ensure smooth administration and group interaction.
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Malcolm Sullivan
Malcolm Sullivan has an extensive background in banking and real estate financing, gained whilst working for Mellon Bank, Swiss Bank Corporation and Debenham Tewson Financial. This experience includes long-standing involvement in project financing, primarily in the area of international commercial real estate. He is also an experienced trainer, having undertaken many training assignments in the UK, Africa, the Caribbean, Eastern Europe, Asia and Latin America. He has worked on numerous training assignments covering project finance for clients, including corporates, development and commercial banks.
Courses run by this instructor
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Course dates