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Infrastructure Finance D. C. Pai Prof. PIMSR
IMPORTANCE OF INFRASTRUCTURE ,[object Object],[object Object]
IMPORTANCE OF INFRASTRUCTURE ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
DEFINITION OF INFRASTRUCTURE ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Categories of Projects ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Methods of Financing CapEx ,[object Object],[object Object]
Traditional Financing ,[object Object]
What is Project Financing ,[object Object],[object Object]
Project Finance ,[object Object],[object Object],[object Object],[object Object],[object Object]
[object Object],[object Object],[object Object],[object Object],How is infrastructure lending different from other project lending?
Project Finance Vs. Corporate Finance Sponsors Cost Overrun Support : 100% Sponsors Cost Overrun Support : Limited DSRA: Nil DSRA: 6months Debt: Equity- 50:50 to 66:33 Debt: Equity- 70:30 to 80:20 Recourse Limited to all borrower assets Recourse limited to cash flows Previous Track Record: Yes Previous Track Record: Nil Corporate Finance (Balance Sheet Funding) Project Finance
Types of Project Financing ,[object Object],[object Object],[object Object],[object Object]
Why a special purpose entity? ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Concessionary Financing Instruments ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Cost of Various Financing Instruments Maturity 5 – 12 years, Typical Cost 11 -13% 50 – 80% Senior Debt 4 Maturity 7 – 15 years Typical Cost : 12 – 15% 0 -20% Subordinate Debt 3 14 – 20% Equity IRR 15% - 30% Equity 2 Nil 0% - 20% Grants (if applicable) 1 Costs/Tenor Percentage of Project Cost Instrument S.No.
Project Appraisal   ,[object Object],[object Object],[object Object]
PROJECT APPRAISAL PROCESS ,[object Object],[object Object],[object Object],[object Object],[object Object]
Stages in Project ,[object Object],[object Object],[object Object],[object Object]
Time Distribution of Project Effort Level of effort (%) Conception Selection Planning & Implementation Evaluation &  Termination or Transfer Stages of Project Development Construction & Operational Abandonment
Stages in Financing ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Issues related to appraisal ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Issues….. ,[object Object],[object Object],[object Object],[object Object],[object Object]
PROJECT APPRAISAL PROCESS ,[object Object],[object Object],[object Object],[object Object],[object Object]
Pre Sanction Checks ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Credit Investigation ,[object Object],[object Object],[object Object],[object Object],[object Object]
PROMOTER EVALUATION ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
STRUCTURAL/CONTRACTUAL FRAMEWORK
Concession Agreement ,[object Object]
Project Contracts ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Financing Framework ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Financing Framework ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Project Structure ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Successful project structure entails a win-win situation for all Project SPV Sovereign Sponsors Suppliers Guarantor EPC Lenders O&M Off takers
STRUCTURAL / CONTRACTUAL FRAMEWORK ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

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Infrastructure finance nibm

  • 1. Infrastructure Finance D. C. Pai Prof. PIMSR
  • 2.
  • 3.
  • 4.
  • 5.
  • 6.
  • 7.
  • 8.
  • 9.
  • 10.
  • 11. Project Finance Vs. Corporate Finance Sponsors Cost Overrun Support : 100% Sponsors Cost Overrun Support : Limited DSRA: Nil DSRA: 6months Debt: Equity- 50:50 to 66:33 Debt: Equity- 70:30 to 80:20 Recourse Limited to all borrower assets Recourse limited to cash flows Previous Track Record: Yes Previous Track Record: Nil Corporate Finance (Balance Sheet Funding) Project Finance
  • 12.
  • 13.
  • 14.
  • 15. Cost of Various Financing Instruments Maturity 5 – 12 years, Typical Cost 11 -13% 50 – 80% Senior Debt 4 Maturity 7 – 15 years Typical Cost : 12 – 15% 0 -20% Subordinate Debt 3 14 – 20% Equity IRR 15% - 30% Equity 2 Nil 0% - 20% Grants (if applicable) 1 Costs/Tenor Percentage of Project Cost Instrument S.No.
  • 16.
  • 17.
  • 18.
  • 19. Time Distribution of Project Effort Level of effort (%) Conception Selection Planning & Implementation Evaluation & Termination or Transfer Stages of Project Development Construction & Operational Abandonment
  • 20.
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  • 22.
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  • 24.
  • 25.
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  • 28.
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  • 31.
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  • 33.