Project Finance and PPPs
Practical learning with real-world application
This program is eligible for 24 CE credit hours as granted by CFA Society VBA Netherlands
The Project Finance and PPPs program focuses on structuring, financing and valuing large capital projects and emphasizes Public Private Partnerships (PPP). Funding large capital expenditure projects delivers high returns but is inherently risky. In the aftermath of the great financial crisis, project failures have generated billions of dollars of losses for the equity sponsors and the creditors. The program provides a framework and methodology to look at project financing as a viable financing option from both the debt and equity perspective. Using case studies, that cover both social and economic infrastructure projects, the program illustrates how and why major infrastructure projects succeed or fail. The cases will show that improper structuring rather than the intrinsic value of projects has been the cause of many recent failures.
How you will benefit
Understand when to use project finance and how it differs from other corporate finance techniques
Identify the key financing sources: bank loans, multilateral funding and bond issue
Structure the financing with a wide variety of financial and industrial participants
Understand BOTs and Public Private Partnerships (PPPs)
Conduct the due diligence of a project from a bank’s point of view
Identify and manage the key risks, specifically the political, construction, market, FX and environmental risks
Understand the cash flow model and sensitivity analysis
Recognize the limits of IRR and how it can be manipulated
Learn how to properly value projects
Familiarize yourself with new initiatives for infrastructure finance
Overview of Project Finance
The project finance framework
Key characteristics and key parties involved
Risks and risk mitigants
- Political, sovereign and expropriation risks
- Economic risks Project finance as a financial contract and contract types (BOT, BOO, etc.)
Public Private Partnerships (PPPs)
Case Study: PPP and Social Infrastructure
The case study deals with the risks and the risk mitigants of a social infrastructure project (desalination plant). The goal is to identify the most significant risks in social infrastructure.
Financing Issues in Project Finance: the Macro View
Financing types: bonds versus loans
Assessing project finance debt
Financial ratios: DSCR, LLCR, PLCR, etc.
Financing risks and re-financing risks
Lenders protection: cash sweeps, mandatory cash sweeps, etc.
Role of Multi-Lateral Agencies (MLA) and Political Risk Insurance (PRI)
Common derivatives used in project finance: swaps, etc.
Case Study: PPP and Economic Infrastructure
The case study illustrates the impact of financing decisions on a project’s outcome (in this case bankruptcy). It shows how critical the structuring of a project is for its survival.
Financing Issues in Project Finance: the Micro View
Financing issues during construction
Financing issues during operation
Interplay between construction and operation
The goal is to illustrate how banks calculate debt commitments and optimize the capital structure, allowing participants to better understand what are known as a circular references and how to solve them.
Project Valuation: Cash Flows and Discount Rates
The relevant cash-flows and the cash-flow waterfall
- Cost of unlevered equity and levered equity
- Cost of debt
- The Weighted Average Cost of Capital (WACC) Cash flows
- Free Cash Flows (FCF)
- Cash Available for the Debt Service (CADS) Net Present Value (NPV)
Reasons why the WACC cannot be used in project finance
- Adjusted Present Value (APV) techniques
- Compressed Adjusted Present Values (CAPV) techniques Flow-to-equity (FTE) techniques
The goal is to let the participants experience cash-flow calculations and discount rates as they apply in the real world.
Project Valuation - the IRR
The unlevered (project) IRR versus the levered (equity) IRR
Usefulness of the IRR
How to look good with the IRR
Group ExerciseThe goal is to let the participants better understand key differences in IRR calculations and how they can be manipulated.
Capstone: Combining Valuation and Financing Issues
Critical overview of methods, risks, and other considerations in project finance
Case Study: PPP and Economic Infrastructure
The case study involves an economic infrastructure project and covers both financing and valuation issues. The case is unique as it involves the IPO of a project and deals both with corporate and project finance issues.
Who should attend
Project Finance and PPPs is recommended for finance professionals, consultants, developers, project managers, engineers, lawyers and portfolio managers from both the private and public sectors.
No prior valuation experience is assumed.
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Pierre Hillion is the de Picciotto Chair at INSEAD in Alternative Investments and Visiting Professor at UCLA and CalTech. He received his MBA from Ecole HEC, holds a DEA from the Université Paris-Dauphine and a PhD from the University of California in Los Angeles (UCLA).
Pierre's research interests lie in the areas of empirical tests of asset pricing models, options pricing models and empirical corporate finance.
Dates & fees
5 - 8 November 2018
23 - 26 April 2019
> Program fee includes all study materials, books and software that are required for the program as well as daily luncheons.
Program fee is exempt from VAT for clients located in the Netherlands. For other EU and Non-EU clients, VAT may be due by client and will not be charged by AIF. Fees may be subject to change.
100% of the attendees in the April 2018 session would recommend the Project Finance and PPPs program to their colleagues.
“The program challenged me to look at certain subjects in a different way.”
Manager, Project Development & Finance
“The program gives a different perspective to project finance and enables participants to understand project viability and valuation.”
First Atlantic Bank
“Excellent practical knowledge on project finance which was highly valuable.”
Mubadala Development Company
United Arab Emirates