Project Financing Analyzing And Structuring Projects Financial Instruments And Risk Management

This is a comprehensive set of books on project financing. In, which covers the project financing process from the perspective of a wider and more general group of stakeholders by addressing the key elements of cash flow, collateral/support structures and risk management.

The book describes the different tools and techniques available to anyone who is engaged in providing funding or advice to a project. Project finance is ultimately about applying three basic principles to a funding situation and from these three, all the other ideas flow including contracts. First, there needs to be a cash flow coming from the project that is capable of being captured by finance providers. Second, there needs to be a group of assets that can be segregated and contained by making sure they cannot be taken away by other parties and thirdly there needs to be a risk envelope that is well understood and managed dynamically during the project's life. To do this, a network of contracts must exist to support the rights of the different stakeholders and their legal claims on the project. In this book the authors examine all of these aspects and provide some examples/mini-cases of project structures and approaches. The book begins and ends with a longer case study of two projects that were standalone examples of project financing and controversial for different reasons at the time of their fundraising.Bundle Set: Project Financing (Analyzing and Structuring Projects & Financial Instruments and Risk Management)

This book covers the project financing process from the perspective of a wider and more general group of stakeholders by addressing the three key elements of cash flow; collateral/support structures; and risk management. Following a detailed description of project financing in the first chapter, the authors discuss the project financing process, modelling and risk management, public private partnerships and project financing in practice including the use of the principles in a range of different contexts. A sound understanding of project management is fundamental to successful project financing, as is the need to have a clear plan for a project to communicate the essential information that different stakeholders require.A successful project financing starts with the different phases of a project and descriptions of the key risk areas include the challenges in estimating the cost of a project and the general principles of financial modelling with a discussion of the unique aspects of financial modelling for different industries. Throughout the book, short recent international case studies are used to illustrate successful and unsuccessful projects allowing the lessons learned to be visible and there are many examples of specific applications of project finance techniques throughout the text.Bundle Set: Project Financing (Analyzing and Structuring Projects & Financial Instruments and Risk Management)

Project finance has spread worldwide and includes numerousindustrial projects from power stations and waste-disposal plantsto telecommunication facilities, bridges, tunnels, railwaynetworks, and now also the building of hospitals, educationfacilities, government accommodation and tourist facilities. Despite financial assessment of PF projects being fundamental tothe lender’s decision, there is little understanding of howthe use of finance is perceived by individual stakeholders; why andhow a financial assessment is performed; who should be involved;where and when it should be performed; what data should be used;and how financial assessments should be presented. Current uncertainty in financial markets makes many sponsors ofconstruction project financings carefully consider bank liquidity,the higher cost of finance, and general uncertainty for demand.This has resulted in the postponement of a number of projects incertain industry sectors. Governments have seen tax receiptsdrastically reduced which has affected their ability to financeinfrastructure projects, often irrespective of the perceiveddemand. Equity providers still seek to invest, however there areless opportunities due to market dislocation. Due to the demand forglobal infrastructure it is believed that project financings willreturn to their pre-crunch levels, or more so, howeverlenders’ liquidity costs will be passed on to the borrowers.Lenders will also be under stricter regulation both internally andexternally. The steps outlined in the guide are designed to provide a basicunderstanding for all those involved or interested in bothstructuring and assessing project financings. Secondary contractsinvolving constructors, operators, finance providers, suppliers andofftakers can be developed and assessed to determine theircommercial viability over a projects life cycle. Special Features a structured guide to assessing the commercial viabilityof construction projects explains economic metrics to use in the decision makingprocess detailed case study shows how stakeholders apply the concept ofproject finance

- Project finance as a tool for financing infrastructure projects - Public finance for infrastructure projects - Financial instruments - Financial engineering - Restructuring projects - Financial markets - The concession or build-own-operate-transfer (BOOT) procurement strategy - The private finance initiative - Challenges and opportunities for infrastructure development in developing countries - Financial institutions - Privatisation as a method of financing infrastructure projects - Typical risks in the procurement of infrastructure projects - Mechanism for risk management and its application to risks in private finance initiative projects - Insurance and bonding - Case study of a toll bridge project - Case study on managing project financial risks utilising financial engineering techniques

Praise for Project Financing, First Edition "Owing to his teaching as a finance professor and as an experienced investment banker, John Finnerty brings to his book, Project Financing, an insightful perspective, blending the theoretical with the practical." —Zoltan Merszei, former chairman, president, and CEO, The Dow Chemical Company "Finnerty has managed to distill the complexities of project financing with its myriad components and variations. Clear, practical, and in-depth, Project Financing is a valuable user's guide for project sponsors, regulators, host governments (local and foreign), and financiers alike." —Ricardo M. Campoy, Director, Kilgore Minerals Ltd. "Project Financing warrants a place in the essential libraries of corporate financial managers, their advisors, senior strategists, bankers, large private investors, government officials, and anyone who aspires to master innovation in corporate finance." —Robert F. Bruner, Dean and Charles C. Abbott Professor of Business Administration, Darden Graduate School of Business Administration, University of Virginia "This book is the first comprehensive treatment of project financing. It provides an invaluable contribution to financial management literature and practice." —Andrew H. Chen, Distinguished Professor of Finance, Southern Methodist University

Since the 1970s, the practice of financing major private and public sector capital-intensive projects has shifted to an ever-greater reliance on private funding sources, as opposed to direct financing through the issuance of corporate or government bonds. In the 1990s, these financing practices have undergone further changes with the increasing globalization of capital markets, the growth of derivative instruments, and the rapid increase in information technology that enhances cash-management practices. Today's project financing market is increasingly using sophisticated capital market, bank and agency financing mechanisms as well as using derivative instruments for asset and liability management. Thus, financial market innovations are bringing the once separate fields of project financing and international finance more closely together. This is the first book to treat both topics as an interrelated whole, for contemporary project financing cannot be fully understood without a good working knowledge of the international financial markets that have developed the various financing techniques and funding sources being used. The book provides an in-depth description of cross-border project financing as a technique for financing capital-intensive projects, as well as an overview of certain financing and derivative instruments currently available in the global financial markets. The first part of the book provides an overview of certain funding and derivative instruments currently used in the international financial markets, including a general overview of financial innovations that have occurred in recent decades. Topics covered include an introduction to the syndicated Euro-credit market; an overview of various marketable debt securities actively used in the international financial markets; an introduction to depositary receipt as an innovative way of raising cross-border equity capital; an elaboration of the derivative instruments most commonly used in the project financing arena, including interest rate, currency and commodity swaps; and finally an overview of banks' off-balance sheet activities as a critical driving force for the participation of banks in the international financial and derivative markets. The second part of the book provides an in-depth analysis of project financing that concentrates on the financier's perspective. Topics covered include a general overview of the project financing industry; a step-by-step description of a typical cross-border project finance transaction; a description of the main characteristics and advantages of project financing as opposed to more traditional corporate lending practices; an overview of appraisal techniques for assessing project financing; a comprehensive analysis of the different risk management techniques used in project financing for reducing, distributing and hedging risks; and a brief overview of certain limited-resource financing schemes. The book includes a special focus on the various stages of the risk management process for project financing, elaborating on the different stages of risk identification, risk assessment, risk reduction, risk distribution and hedging and insurance. The authors also provide a comprehensive glossary of terms relating to international finance and project financing. This book will fulfill the need for an essential text on project financing as well as a professional reference guide.

This cutting-edge financial casebook is divided into four modules: Structuring Projects, Valuing Projects, Managing Project Risk, and Financing Projects. The cases have been carefully selected to reflect actual use of project finance over the past five years in terms of geographic location (the cases come from 15 different countries) and industrial sectors. * Benjamin Esty, of the Harvard Business School, is one of the leading scholars in project finance. * Project finance is becoming the financing mechanism of choice for many private firms. * Cases require the reader to integrate knowledge from multiple disciplines when making a single managerial decision. This integration of functional areas such as strategy, operations, ethics, and human resource management encourages the reader to adopt a more integrative perspective and understanding of the interconnectedness of managerial decision-making.