Many of our clients had difficulties to finance their own projects through their local banks (To see our trailer please click here). Paradoxically the international market is looking for secure investment in financial instruments with the expectation of high returns.
This, we thought, is a chance to do two things at the same time. 1. Secure funds for interesting and promising projects 2. Offer either Bonds or Funds (or other, for instance structured products to the international market (with an interesting underlying based on your project securing the investment).
project financing is financing of a sole subject established for
purpose of project realization usually termed as “SPV” (Special Purpose
Vehicle). During the project financing the creditor / lender believes in
cash flow and incomes of such SPV subject as sources through which the
indebtedness will be paid and in assets of such SPV as security for the
Project financing means that own and credit sources
of financing are paid from cash flow generated by a project. A proposal
of financial structure is thus particularly designed with accent to the
project´s self-financing ability. This means a verification of the
project´s financial flow capacity at level sufficient to cover
repayments of debt service, achieving reasonable return of equity
capital invested and generation of sufficient reserves for risk
Project financing sets up the project so the risks and
gains related to the project would be justifiably divided among all
project parties (namely „sponsors“- shareholders, subscribers, suppliers
or operators bearing a particular part of risk) and also financing
subjects. Therefore, it is typical that when transactions of such type
are realized the owners of the project company are responsible for
credit payment up to their share on equity, eventually are responsible
for project support in specific cases, which are clearly defined in
It is important to mention that project financing is
primarily focused on solution of larger and more specific transactions
demanding a sophisticated approach on project basis.
Principal terms and criteria for project realization
of project financing can be applied for either small or large projects.
However, in case of non-recourse principle or limited recourse
principle towards investors it is necessary to carefully analyze
technical, contractual and also financial attributes of the project,
preferably in cooperation with qualified advisors in specific cases.
order to arrange a self-financing project it is necessary to establish
the contractual relationships both with principal offtakers and
suppliers on the mutually motivated basis. Emphasis on trustworthy
agreements concerning project supply and construction is very important.
With respect to limited recourse principle these contracts should
include conveniently arranged engagements on supply and payment
conditions respecting a fixed price and quality of supply. It is
preferable to use the FIDIC standards. Not only high-quality security is
decisive for feasibility of such projects. Also capability of involved
parties to fulfil commitments resulting from the agreements and to bear
also potential sanction must be considered. Thus, it is preferable so
that parties are appropriately financially strong.
cases of pure project financing the limited recourse principle is
respected and therefore the security is represented usually by all
assets of financed project, common example: Pledge on assets of
project company (SPV),Pledge on entity,Pledge on business share in
project company,Specific security and obligations of owner, investor and
suppliers (including advance payment warranty, performance bonds,
retained cash etc.),guarantees, cession of specified returns from
The security structure is created
individually with respect to a particular project and so to respect its
commercial and economic nature.
of financingIn the whole process we underline the importance of
preparatory phase. Upon primary project identification the client
receives an indicative term sheet with basic financing parameters
outlining basic frame of the loan terms. In case of acceptance of
indicative term sheet conditions by the client the process of obligatory
credit application follows.
In standard cases the preparatory
process takes 4–8 weeks from admission of indicative term sheet to
approval. Consequently 4-8 weeks interval follows for the preparation of
credit documentation and compliance with the drawing conditions. This
horizon can be assumed in the situation when the client is performing
all steps in alignment with the conditions set in indicative term sheet
and no negative actualities have occured.
After compliance of all conditions set in the credit application the credit disbursement may begin.
key areas which is our team focused on belong mainly - energy utilization
from primary sources and renewable sources, - infrastructure of land
constructions and telecommunications, - Public Private Partnership
projects (PPP), - environmental projects, - projects of productive and
Nevertheless, we are prepared to provide you with
sophisticated support for projects from all areas of human activity. We
consider particular ability of assessment of a concrete business plan
being the main added value of our work.
We evaluate particular
financial-economic parameters of every project within complex
environment of commercial-operational relationships so that we could
treat the most range of risks to secure client interests.
with the client we design tailored financial conditions and suitable
structure of the project.
IFC is prepared to syndicate if
Within financial advisory we provide services respecting the
expectations of the owners / investors / contributors with exploitation
of the long-standing experience.
We are able to secure also
the complex services concerning financial flows of a project company
namely in both construction and operation period including creation of
reserve accounts, eventually blocking accounts etc.
where it is suitable IFC is able to provide an integral advisory
concerning the subsidy financing (e.g. EU, Funds, investment incentives
etc.) namely from subsidy audit to documentation preparation of