Project Finance is a technique used for mobilizing capital for very large Greenfield projects with predictable cash-flows, especially in energy, construction, public utility and similar infrastructure-related sectors.
The essence of Project Finance is risk identification and allocation through contractual arrangements among the various parties responsible for implementation, operation, supply of inputs, purchase of outputs etc. Such projects can also be implemented under public-private partnership (PPP) model.
In Project Finance, a separate project vehicle is created, in order to keep its assets and liabilities separate from those of the project sponsor.
- Analyzing the prospect of the project through due diligence and feasibility study
- Creating the Project Vehicle
- Preparing a structure for risk allocation through contractual arrangements
- Raising fund through syndication or other appropriate modes
- Coordinating regulatory and legal requirements for deal closing