Introduction to Project Finance
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While riding on a high-speed train through Japan, Europe or China, a passenger may see wind turbines scattered throughout the countryside or monumental impressive bridges. Without realizing it, the passenger is likely to have benefitted from infrastructure projects that have been financed by a mechanism called Project Finance. The high-speed rail, the wind turbine and the bridge are all large and complex infrastructure ventures. These projects can be made possible through traditional financing methods; however, infrastructure projects are increasingly financed by this project finance mechanism that engages a multitude of participants including multilateral organizations, governments, regional banks, and private entities. In project finance, participants negotiate amongst themselves to spread risks associated with an undertaking, thereby increasing the chances for success in developing vital infrastructure projects. |
Project finance is the preferred financing mechanism for large infrastructure projects that are essential for developing countries, emerging economies, and developed countries alike. This article will define project finance and compare it to traditional corporate finance, present project finance participants, and discuss the financing mechanism. It will also address the advantages and risks associated with project finance and provide insight into the future of project finance.
Here's the summary and links to the pages of this article:
Here's the summary and links to the pages of this article:
- What is Project Finance?
- Project Finance vs. Corporate Finance
- Parties to a project financing
- Parties' motivations for project financing
- User or offtaker revenue stream?
- Types of PPP
- Typical steps in project finance
- Key project risks
- Mitigation and risk allocation
- Financing mechanisms
- Bibliography
In case you need more information, or are eager to get into the details of Project Finance, I recommend the following reads, that I personally bought as to create the summarized information of this Project Finance website (Amazon links) :
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