Higher Institutional Project Finance

A project financing is the limited, long term or zero recourse financing solution available to the borrower over assets, interests and rights based on the concerned project.

For those planning to start an infrastructure, public or industrial services project and require funds for it, then our higher institutional project finance is the right choice for you.

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You can repay the loan using cash flow generated when the project is completed instead of the sponsor’s balance sheets. When any borrower fails to depend on the loan terms, the lender can completely control the project. Along with that, financial companies can earn more margins when the company benefits from this scheme when shifting over associated project risks. Hence this kind of loan scheme can be favoured by companies, lenders and sponsors.

An intermediary can be formed to bridge the gap between lenders and sponsors, such as SPV - Special Purpose Vehicle. The essential role of the Special Purpose Vehicle is to monitor the fund management and procurement to make sure that project assets never submit to the impact of project failure. Before the lender decides to do project finance, all risks must affect allocated and identified projects to eradicate future complications.

Key Features of Higher Institutional Project Finance:

When the project deals with more funds, you must understand the structured financial scheme. Have a look below to explore the key features of higher institutional project finance:

  • Risk allocation

  • Capital intensive financing scheme

  • Asset ownership is decided at the project completion

  • Multiple participants applicable

  • Loan repayment with project cash flow

  • Limited or zero recourse financing solution

  • Sponsor credit doesn’t have an impact on the project

  • Better tax treatment

Various Stages of Higher Institutional Project Finance:

Pre-Financing Stage

  • Identification of the Project Plan

  • Minimising and Recognising the Risk

  • Checking Project Feasibility

Financing Stage

  • Loan or Equity Negotiation

  • Arrangement of Finances

  • Payment

  • Documentation and Verification

Post-Financing Stage

  • Timely Project Monitoring

  • Loan Repayment

  • Project Closure

Sponsors in Higher Institutional Project Finance:

It is essential to understand the sponsor type associated with the project to determine its objective. It can be categorised into four types of project sponsors that are involved in the higher institutional project finance:

  • Public sponsor

  • Industrial sponsor

  • Financial sponsor

  • Contractual sponsor

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