Project finance training course

This training course provides delegates with a highly practical guide to the strategies, methodologies and structuring techniques used in project finance.The course examines the different approaches taken for the financing of infrastructure such as toll roads and mining projects, as well as oil and gas assets.

The project finance course is conducted in a work shop format, with the emphasis on “learning by doing”. As a key outcome of their work and learning on the course, delegates will be equipped to create a full cash flow project finance model.

The course covers financial mathematics and return measures, including the application of IRR (internal rate of return) and NPV (net present value) in project finance. The program also includes analysis of the lender’s perspective (how do we keep banks happy?) focusing on project risks and mitigation techniques.

Project finance course: day 1 of 3

  • Session 1: introduction to the course
    • Project finance: definition
    • Limited and non-recourse project finance
    • Legal structure
    • Financing
    • Structuring project finance deals
    • Constituents
  • Session 2: the stages/ process in developing project finance deals
    • The big picture
    • The role of the feasibility study
    • Planning
    • Financing structures
    • Project finance estimation: a dynamic process
    • Opportunities in project finance
Group exercise. Teams discuss different types of infrastructure assets such as toll roads and mining projects. Group members present a summary of key findings which are discussed in class
  • Session 3: types of project finance
    • Traditional project finance
    • PPP – Public Private Partnerships
    • PFI – Private Finance Initiative
    • Cash flow backed
    • Bases of valuation
    • Determinants of value
    • The project finance investment decision making process
  • Session 4: building a project finance cash flow model
    • Key elements of the cash flow model
    • Creating assumptions
    • Managing the sensitivity analysis
    • Monitoring covenants
    • Building growth rates into the project finance model
    • Obtaining source data for modelling
Case study. Course delegates work in teams to build an Excel cash flow model for different types of project finance deals. Throughout the case study, course delegates are given help and support from the tutor as they work in Excel to familiarise themselves with the modelling techniques employed in forecasting project finance cash flow.

Project finance course day 2

  • Session 5: valuation mathematics in project finance
    • The time value of money – how it applies to project finance
    • Yields and rate of return
    • Discounted Cash Flow (DCF) analysis for project finance
    • Running sensitivity analysis and table functions
  • Session 6: free cash flow for the project
    • Cash adequacy
    • Recourse
    • Standby
    • Liquidity issues in project finance deals
  • Session 7: project dynamics
    • Key players and their financial interests
    • The role of financial advisors
    • Technical advisors to the project
    • The role of consultants
    • Legal counsel
    • Ownership structures in project finance
    • Cross border issues
    • Key project finance contracts
  • Session 8: the process of putting together a project finance deal
    • Collating information
    • Data room – virtual vs. physical/ actual
    • Preparation of the information memorandum
    • Debt underwriting – working with the main banks
    • The syndication process for the deal
    • Post close legal, contractual and financial monitoring
    • Reviewing the project
    • Key project finance contracts
Group case study: continuing with the day 1 project finance modelling exercise. Developing the financing structure. Incorporating returns analysis: understanding the role of NPV, IRR and DCF as it applies to project finance modelling.
  • Session 9: project finance documentation
    • The term sheet
    • The information memo
    • Loan documentation
    • Security documentation
    • Escrow accounts
    • Agency agreements
    • Licensing agreements
    • Legal opinions
    • LMA standard terms
  • Session 10: the financing structure
    • Sources and uses for a project finance deal
    • Capital structure
    • Valuation vs. cost
    • Vendor financing
    • Borrowing amounts – drivers on project finance debt capacity
    • Rules of thumb used in project financing lending – and their disadvantages
    • Licensing agreements
    • Legal opinions
    • LMA standard terms
Group case study: structuring a project finance term sheet. Different groups are assigned scenarios and roles to play (e.g. bidder for an existing project, or existing/ new lender). What kind of deal can bidders secure from existing/ new lenders to the project?

Day 3 of the project finance course

  • Session 11: sources of financing
    • Conventional vs. non-conventional sources of finance for the project
    • Credit enhancement
    • The impact of bank guarantees
    • Export credit agencies
    • Multi lateral agencies
    • Supplier/ constructor/ sponsor project co-financing
  • Session 12: controlling project risk
    • Operational risk management
    • Financial
    • Liquidity risk
    • Economic/ inflation risk
    • Management
    • Legislation
    • Environmental
    • Other project finance risks
  • Session 13: financing/ credit considerations for the project
    • Implementation risk
    • Supply/ resources
    • Technological risk
    • Sale/ off take risk
    • Operating company risk
    • Project vs. promoter risk
    • Cross defaults
    • Currency risk
    • Completion risk
    • Market risk
Case study: writing a feasibility study/ loan proposal for a project finance deal. Groups are assigned different projects and asked to develop key facets of the feasibility/ financing proposal.
  • Session 14: structures used in PPP (Public Private Partnerships) and PFI (Private Finance Initiative)
    • BOT – Build Operate Transfer
    • BOOT – Build Own Operate Transfer
    • DFBO – Design Build Finance Operate
    • DCMF – Design Construct Manage and Finance
    • BLT – Build Lease Transfer
    • BOO – Build Own Operate
  • Session 15: financing arrangements used in PPP/ PFI projects
    • Leasing
    • Senior debt finance
    • Construction and development loans
    • Supplier credits
    • Mezzanine and exotics
    • Private equity investors and their role in project finance
  • Session 16: lessons learnt from times of crisis
    • Project finance – getting back to the fundamentals
    • Structured finance
    • Issuer advantages
    • What goes wrong
    • Disadvantages
    • Risks for the investor in securitised project finance receivables
Course outcomes: best practice project finance modelling and analysis
  • Delegates who have improved their understanding of and have had experience of modelling project finance deals
  • Simple and clear reference Excel models – providing participants with a platform for future analysis and decision making
  • Participants who, at the end of the course, understand the drivers on project finance deals and how project parameters can be structured to suit the various parties

Project finance course training provided inside your company

Project finance is part of our financial modelling course program that is available only for delivery inside your company. Our course reviews are consistently strong. If you have 4-5 staff who are interested in a project finance course, in-company training will prove cost effective.