Valuation Framework for Energy Investment Finance

Turalay Kenc (), Ali Mohamud Farah (), Didar İlyassov () and Ismail Orakcıoglu ()
Additional contact information
Turalay Kenc: The INCEIF University
Ali Mohamud Farah: Jigjiga University
Didar İlyassov: Narxoz University
Ismail Orakcıoglu: Istanbul Bilgi University

A chapter in Energy Entrepreneurship, Sustainability, Innovation and Financing, 2025, pp 263-295 from Springer

Abstract: Abstract Structured finance products like securitization and project finance are critical for financing large-scale energy investments, but lack robust valuation models. We build on (Leland, The Journal of Finance 62:765–807, 2007) elegant financial synergy framework, expanding it to incorporate non-risk-neutral pricing, long-term debt contracts, varying macro conditions and firm lifecycles, and stochastic interest rates and cash flows. This allows examining correlation effects on liability/asset values. We then apply the enhanced model to optimize energy financing decisions—assessing mergers, securitization, and project finance given financial synergies under different market states, lifecycle stages, and parameter correlations. Preliminary analysis finds low cash flow/rate correlations and later lifecycle stages promote separate financing vehicles by enabling greater risk reduction, while high correlations and early stages favor on-balance sheet merger financing to maximize financial/operating synergies. Market conditions help determine optimal timing.

Keywords: Financial synergy; Structured finance; Asset securitization; Project finance; Macroeconomic conditions (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-3-031-80001-6_13

Ordering information: This item can be ordered from
http://www.springer.com/9783031800016

DOI: 10.1007/978-3-031-80001-6_13

Access Statistics for this chapter

More chapters in Springer Books from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().