Who should attend
- Bankers/Investment Bankers
- Project Finance Modellers
- Financial Advisors
- Sponsors/Project Joint Ventures
- Project Developers
- Government/PPP Agencies
- Public Sector Managers
- Export Credit Agencies
- Multilateral Agencies
- Accountants/Taxation Advisers
- Financial Analysts
- Share market Analysts/Brokers
- M&A/Buyout Specialists
- Privatization Executives
- Company Treasurers/Directors
- Credit Committee Staff
- Rating Agencies
- Project Managers/Engineers
- Project Consultants
- Investment/Portfolio Managers
- Insurance Advisers/Brokers
About the course
Learn to analyse and model qualitative and quantitative project risks
This practical five-day International Project Finance programme will show you how to analyse project finance opportunities and properly structure transactions in order to minimize risks and improve the prospects for future strong performance, both in existing portfolios and new transactions. You will also learn how excel models are used to assess project debt capacity, return on investment, and other metrics common to attractive deals.
Besides discussing many recent examples of financing structures attractive to Banks, Institutional Investors, and Equity providers, careful attention is paid to credit enhancers such as Export Credit Agencies, Development Banks, Private insurers, mon-lines and others.
By the end of the programme, you will have developed a framework for recognizing and analysing qualitative and quantitative project risks when financing green field projects as well as facility upgrades.
Day 5: Cashflow Modelling Workshop
The program's fifth day session is a stand-alone cash flow modelling workshop. Using excel software, participants create a model for an LNG Plant suitable for examining project debt capacity as well as return on investment.
This course combines presentations with case studies, group discussions and practical exercises to ensure the learning experience is practical, engaging and relevant. Detailed case studies are drawn from various industrial sectors around the world including oil and gas, conventional and renewable energy, transportation and other infrastructure.
Themes: Structuring Projects and Creating a Security Package; Discovering the Most Efficient Sources of Finance; Cashflow modelling.
Project Finance Today
- Current challenges in Southern Africa for project finance
- Who are the players?
- Identifying and allocating risks
- What can go wrong?
Examples: Financing a pipeline, tankers; other oil and gas projects.
- PPP and project finance: financing infrastructure
- BOO, BOT, BOOT, DBFO and other approaches
- Private investment in public infrastructure
- Examples: Power projects and toll roads.
Projects and Risk Identification
- Risks in development
- Construction and operating risks
- Feedstock and supply
- Market risks
- Environmental risks
- Financial risks
- Political and regulatory risks
Examples: Gas field development and infrastructure, oil refineries, LNG, Electricity plants.
Sources of Finance: Financing Checklist
- Domestic and foreign banks
- Bond markets
- Development banks, ECAs and other official creditors
- Islamic finance
- Sources of equity
Cashflow Modelling Approaches
- Financial modelling and cash flow analysis
- The view of lenders: DSCR and PV coverage
- Equity considerations: IRR and NPV
- Approaches to evaluating the cost of capital
- Project returns vs. equity returns
- Forecasting techniques and limitations
Case Study: Financing a Gas Processing Plant.
Participants break into small groups to prepare a case study. A computer simulation will be used to model cashflows. Groups will present their solutions.
Themes: Legal Issues; Bank Finance; Export Credit Agencies; PPP for Transportation and other Infrastructure Projects
- Legal Issues in Project Finance
- Legal environment and regulatory conditions
- Commercial points and legal points in various projects
- SPV Structures
- Key contractual agreements
- Developing a term sheet
- Limiting recourse
- Tax gross up issues
- Market interruption
- Reps and warranties
- Conditions precedent
- Covenants including MAC clauses
- Hedging requirements
Export Finance Techniques (ECAs)
- Guarantees and insurance vs. funding
- Buyer and supplier credits
- Bank incentives inherent in ECA programs
- Costs and availability
- Securitization of ECA guarantees
- Choosing a special purpose vehicle
- PPP: Roads, Railroads, Airports, Ports and Other Transportation Projects
- Public Private Partnerships (PPP) Principles
- Roles for the Public and Private Sector
- Different Structures and Degrees of Private Participation
- Outright and partial government ownership
- Long-term concessions and DBFO
- Privatization of seaports; airport financing Exercise: Constructing a risk matrix
Case Study: Airport finance; Negotiating a term sheet. (Could be a roadway case or a railroad)
Participants will break into groups to work on this PPP project structure. Discussion will focus on project risks, their allocation through contracts, the mix of financing, cash flow projections, as well as rating agency considerations in evaluating the proposed financing structure.
- Club Loans and Syndicated Loan Financing
- What security do banks want?
- Market flex clauses and “Mini-perms”
- Inter-creditor issues
Roles for Development Banks and Agencies
- World Bank Group
- Regional Multilateral development banks (Asian Infrastructure Investment Bank, Asia Development Bank, Africa Development Bank, EBRD, EIB, Inter-American Development Bank, Islamic Development Bank, Others)
- Bilateral agencies (FMO, DEG, OPIC, Proparco, etc.)
- Murabaha, Istisna and Ijara in Projects
- Leveraged Leases
Liberalizing Power Markets
- Market forces and the effect on electrical supply
- Fragmentation of electricity generation
- Merchant power plants (MPPs)
- Rating agencies' analytical model
Renewable Energy Projects
- Growth of the market and various types of renewable energy projects
- Comparing renewable to traditional fossil fuel burning plants
- Project economics
- What is driving the investment?
- Government incentives in various countries
Case Study: Financing a Gas-fired Power Plant Risk allocation among various project participants to finance and construct a power plant. Testing the project's cash flows under varying scenarios with a cash-flow simulation model. What are acceptable DSCR levels? What returns does equity look for?
End of Day 3
Themes: Risk Management with Derivatives, Development Agencies, Funding Power Projects
Price Volatility and Risk Management with Derivatives in Projects
- Financial price movements today: volatility and risk
- Commodity-linked derivatives and securities
- Using interest rate and currency swaps to manage risk in projects
- Options: caps, floors and collars
Roles for Development Banks and Agencies * World Bank Group * Regional multilateral development banks (ADB, IADB, EBRD, EIB, * Islamic Development Bank, etc) * Bilateral agencies (FMO, DEG, OPIC, Proparco, etc.)
- Special features of limited recourse projects in water and sanitation
- Array of structures: Service Agreements Leasing, BOT, Privatization
- Who are the players? Investors and lenders?
- Desalination and electricity projects
- Case examples and PPP transactions
Case Study: Water Treatment facility Participants will break into groups to prepare a case study concerned with financing a wastewater treatment plant in Latin America
- Financing Hospitals, Schools, Prisons, Others
- Concessions and Contract Terms
- Risk Evaluation and Allocation
- Monitoring Requirements
Self-Test and End of Program
Introduction to Cashflow Modeling Session Day 5: Ras Laffan LNG plant
End of Day 4
*Themes: Oil, Gas, LNG and Cashflow Modeling *
Participants will spend a day building a model for an LNG facility. They will assess a wide range of scenarios in order to test a limited-recourse financing package for debt capacity and suitability for investment. With discussion of common approaches to modeling with Excel, “dos’ and ‘don’ts” as well as the practical use models for negotiations.
Modeling Workshop Overview: Objectives and Approaches
- Constructing a Model / Common Myths
- Variations by Project Type
Structuring the Model and Organizing the Data to Create a Cashflow Statement
- Developing the Assumptions Page
- Construction Costs and Timing
- Operating Cost, Plant Capacity Usage, Fixed and Variable Costs
- Reinvestment, Plant Expansion, Productivity Shifts
Developing the Profit and Loss and Balance Sheet
- Factoring in Reserves
- Considering Currencies
- Tax Calculations
- Equity First or Pro Rata
- Manually Designed Equity Subscription
- Draw-down of Debt Linked to Specific Contracts or Expenditures or in a Hierarchy
Ratios and Sensitivity Analysis: Objectives and Limitations
- Measuring Debt Capacity and Investor Return
- Using Modelling Output for Initial Project Vetting
- Supporting on-going Negotiations
End of Program
Ms. Osius designs and delivers executive level training sessions as well as providing consulting services to a wide variety of organizations worldwide. Specializing in international project finance, capital markets, and risk management, she works with corporate investors, private and development ...
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