Theme: the essential components which make up an infrastructure Project Finance / PPP deal
- Characteristics of infrastructure projects: public vs private
- Key players in an infrastructure project finance transaction
- Terminology & acronyms used (PPP, IFI, IPP, etc.)
- Origins & recent history of privatisations, project finance & PPP in infrastructure
- How are project financings initiated? What steps have to be taken?
- What is the state of the infrastructure project finance / PPP market post-the financial crisis?
- What is the impact of Basel III on infrastructure project finance & PPP?
- Conventional government-backed loan security vs project finance/PPP structures: advantages/disadvantages
- Funding structures & proportions of debt & equity
- Cross-sector comparisons
Introduction to infrastructure & Public Services Project Finance Concessions(PPP):
- What is PPP: why the recent interest?
- The choices for government: public sector comparators & value for money analysis
- On/off balance sheet: rationale, issues & criteria for PPPs
- Advantages / disadvantages of PPPs in infrastructure
- The bid process & PPPs
- Common problems arising in PPP projects
Risk Identification & Analysis
- What is risk? Why are lenders risk averse?
- Identification of risk types
- Environmental risks: EQUATOR Principles
- Evaluation of the impacts of risk
- Creation of a risk matrix
- Risk mitigation: how can risk be mitigated and controlled, e.g. political risk?
- Role of the capital market derivatives in risk mitigation
- Role of insurance to mitigate risk: commercial, financial, political
Sources of Debt & Equity
- Equity funds: their requirements & expectations
- Developers & investors
- Private equity & SWFs
- Pension funds & life insurance companies
- Key issues for Investors
- Privatisations of public services: how are they funded?
- Debt: availability, terms, conditions & key issues for lenders:
- Development bank funding
- Export credits
- Commercial loans & term sheet
- The bond markets: how they work & what are ratings
- Islamic funding
- Miscellaneous sources: offsets, leasing & barter
Project Appraisal & Bid Process
- Cash-flow models: how to structure a model. What measures to calculate
- Issues to look out for
- DCF, NPV & IRR: what do they mean?
- Criteria & Ratios used by lenders & investors to measure performance
- Project documents: information memoranda, etc.
- Role of financial advisor & other consultants
- Due diligence: what is it? Who pays?
Cash-flow & Term Sheet Exercises
Course participants will be invited to discuss a project cash-flow and term sheet to identify key issues
Theme 1: (a) what contract documents are required, and (b) what are the key clauses?
Project Documents: Project Finance & PPP Concessions
- EPC / construction contract
- Operations & maintenance contract
- Supplies contract
- Sales contract
- Loan agreement: typical loan covenants
- Shareholders agreement
- PPP concession agreement
Theme 2: what has been the experience of Project Finance / PPP in the power sector?
Real-life Case Histories from developed and/or emerging markets worldwide will be taken and discussed for a range of projects in all the sectors mentioned below. Why have some succeeded, whereas others have failed? Is privatisation a realistic option? Lessons from each will be identified and noted.
Thermal power (oil, gas, coal, nuclear)
- Coal-fired power station, Central Europe
- An IWPP in the UAE
- Marine diesel plant in Togo
- Nuclear power projects
Hydropower (large & mini-)
- Large hydro IPPs in S. America & Turkey
- Mini-hydro C. Europe
Power transmission & distribution: the issues & problems. How to harness private capital
- Wind power project, Cen. Europe
- Solar power, Spain
- Biomass plant, Mauritius
Theme: what has been the experience of Project Finance / PPP in the transport sector?
Real-life Case Histories from developed and/or emerging markets worldwide will be taken and discussed for a range of projects in all the sectors mentioned below. Why have some succeeded, whereas others have failed? Is privatisation an option? Lessons from each will be identified and noted.
- M6 Toll, UK
- M1/M15, Hungary
- R1, Slovakia
- Bina Istra, Croatia
- Toll-road model in Chile
- N1/N4 Platinum Highway, S. Africa
- Lekki Expressway, Nigeria
Bridges & tunnels
- Dartford bridge, UK
- Milau viaduct, France
- Channel tunnel / Eurotunnel
- Oresund bridge, Sweden - Denmark
Railways & Metros
- TGV PPPs, France
- Rift valley railway, Kenya Uganda
- Hong Kong mass transit
- Caracas Metro, Venezuela
- London Underground PPP
- Dubai Metro
Ports & airports
- Spata airport, Athens
- Tirana airport, Albania
- Quito airport, Ecuador
- Gdansk port, Poland
- Air traffic control: NavCanada
- Private Investment in the Municipal and Public Accommodation Sectors
- West Middlesex & UCH, London; Braga, Portugal
- Argyll & Bute, Scotland
- Fazakerley, UK
Govt. & office buildings
- HM Treasury Building, UK; Mapeley STEPS, UK
- Water treatment plants
- Seafield, Scotland; Muharreq, Bahrain
- Wembley Stadium; Lille Stadium, France