BANKABLE PROJECT FINANCING
Bankable Project Financing (BPF) is a method of funding large-scale, long-term infrastructure or industrial projects, where debt is repaid solely from the project's cash flow. This non-recourse or limited-recourse structure allows companies to manage risks for business industries like energy or mining by isolating them in a Special Purpose Vehicle (SPV).
Bankable Project Financing is a method of funding large-scale, long-term infrastructure or industrial projects, where debt is repaid solely from the project's cash flow. This non-recourse or limited-recourse structure allows companies to manage risks for business industries like energy or mining by isolating them in a SPV.
What is Bankable Project Financing?
Bankable Project Financing (BPF) is a method of funding large-scale, long-term infrastructure or industrial projects (of any size, in any business industry and for any type of target audience), where debt is repaid solely from the project's cash flow, not the sponsors' balance sheets. This non-recourse or limited-recourse structure allows companies to manage risks for major initiatives or Business Industries like energy, mining, or transportation by isolating them in a Special Purpose Vehicle (SPV).
Main Concepts of Project Financing
- Non-Recourse Financing. Lenders primarily have recourse only to the project's assets and revenues.
- Special Purpose Vehicle. An SPV is a dedicated legal entity, which is created to hold project assets, isolating risks from the sponsors.
- High Leverage. Projects often use a high debt-to-equity ratio, sometimes up to 90% debt and even more, depending on the bankability and fundability of the project.
- Risk Allocation. Risks are shared among parties, including lenders, sponsors, contractors, and operators. MDACI's main focus is to reduce risks to zero through offtake and HQ Management.
Common Sectors and Features
- Sectors. Generally, investors and financial Institutions are interested in Bankable Project and in every sector or business (e.g. Energy (renewables), Mining, Transport, and Telecom), and Infrastructure (airports, toll roads, pipelines, and-all).
- Components. Often involves long-term, specialised contracts and government approvals and licences.
- Financial Support. Bankable projects with thorough technical due diligence and a "shovel ready" status with all permits secured can easily acquire funding from Export Banks and Investments, and other institutions as Export Guarantee Corporations.
Benefits and Considerations
- Off-Balance Sheet. Sponsors may keep project debt off their balance sheets, reducing impact on their debt capacity.
- Long-Term Financing. Projects often feature long repayment terms.
- Detailed Structure. Lenders require rigorous, independent technical evaluations to ensure viability. MDACI undertakes the Project development auditing by its Partners PWC, KPMG, and others.
- Increased Debt Capacity. Sponsors can undertake larger projects than their own balance sheets would allow, as lenders focus on the project's, not the company's, creditworthiness.
- Long-Term Financing. Loan tenors can be structured for long periods (7–18 years), matching the long gestation periods of infrastructure projects.
Project Finance Documents
Project finance requires a complex, multi-layered set of documents, focusing on risk mitigation, typically divided into financing, project, and security agreements. The main documents include the followings:
- EPCI Agreement
- Sales and Purchase Agrement (e.g. Power Purchase Agreement)
- Loan Agreement,
- Feasibility Studies (e.g Technoeconomic Study, Evacuation Study, and others),
- Operation Management Agreement; and
- Lender Security Agreement, and-all.
- Approvals, Permits and Licences,
OUR PRODUCTS AND SERVICES
Shop the Best Products and Services at the Best Deals
Industrial Products
Explore our great selection of the best and highest-quality industrials Products and shop by category / industry and by product type. Browse through and get the best deals now.
Market Research Reports
Browse through and find the right Research Reports paramount for your business growth. Whether you are a manufacturer, exporter consultant or buyer, this is the right place. Get started now.
BUSINESS INDUSTRIES
Discover our advanced solutions for each Business Industry
AEROSPACE & DEFENCE INDUSTRY
AGRICULTURE & FARNING INDUSTRY
ART & CRAFTS INDUSTRY
AUTOMOTIVE & TRANSPORT
BANKING & FINANCE INDUSTRY
CONSUMER GOODS INDUSTRY
EDUCATION & TRAINING INDUSTRY
ELECTRONICS & SEMICONDUCTORS
ENERGY & UTILITIES INDUSTRY
ENGINEERING & TECHNOLOGY
ENVIRONMENT & ECOLOGY
FASHION & APPAREL INDUSTRY
FOOD & BEVERAGE INDUSTRY
HEALTHCARE & BEAUTY INDUSTRY
HIGH-TECH INDUSTRY
INDUSTRIAL MANUFACTURING
LIFE SCIENCE INDUSTRY
LOGISTICS & SUPPLY CHAIN INDUSTRY
MINING, METALS & MINERALS
NATURAL RESOURCES INDUSTRY
PACKAGING INDUSTRY
PHARMACEUTICAL INDUSTRY
POWER & UTILITIES INDUSTRY
REAL ESTATE INDUSTRY
RETAIL INDUSTRY
SOFTWARE & HARDWARE INDUSTRY
TELECOMMUNICATIONS & ICT
WATER & SANITATION INDUSTRY