Project Finance Transformation

Raghu Dharmapuri Tirumala () and Piyush Tiwari
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Raghu Dharmapuri Tirumala: University of Melbourne

Chapter Chapter 2 in Advances in Infrastructure Finance, 2023, pp 17-45 from Springer

Abstract: Abstract Project finance continues to be one of the most critical sources of financing infrastructure projects in the world. The growth of project financing is directly related to private sector involvement in infrastructure projects, including the adoption of public–private partnership arrangements for implementing the projects. The robustness of project finance is based on agreements between various stakeholders, the due diligence that is conducted on the project cash flows, the ability of each of the stakeholders, and the general risk management framework that is adopted across the transaction. The risks in infrastructure projects are very high during the construction period and taper off substantially after the initial operations period. An appropriate investment de-risking mechanism is needed for projects or sectors to make the same attractive for the private sector. The global financial crisis proved to be a major transformation point in project financing. The monoline industry providing guarantees wound down, the export credit agencies and the multilateral financial institutions, pension funds, and insurance companies increased their participation, both through debt and equity. Infrastructure debt funds have come into existence to fill the gap created by commercial banks. The incremental transformation across all the relationships and practices continues to provide a stable platform for the growth of infrastructure development in the world.

Keywords: Banks; Pension fund; Project finance; Public–private partnership; Risk management; Special purpose vehicle (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-981-99-0440-2_2

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DOI: 10.1007/978-981-99-0440-2_2

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