Project Financing
Project financing is the long term financing of infrastructure, industrial or other projects based upon its projected cash flows. It looks to the projected assets and revenue of a project in order to secure and service the loan.
Risk identification and allocation is a key component of BFA project financing. Risk includes technical, environmental, economic and political risks, particularly in developing countries and emerging markets. As such, while a project may have excellent prospects in a business plan, BFA will conduct a risk assessment and determine the level of investor confidence.
A key determinant of investor confidence is how much equity stake they have in the project. About 25% of the project should be in the form of investor equity. It can take many forms such as capital investment, land, cash, partnership or other assets. BFA can finance the balance including arranging for a partnership, private investment, mezzanine and/or debt.
To get BFAs interest in financing your project, consider the following:
- Projects of interest: Examples of projects for which BFA would have an interest in include: agricultural pursuits, mines, railways, highways, pipelines, power stations, ships, hospitals, hotels or even prisons. Even if your project does not fall into one of these categories, run it by us in any event.
- Bigger is better: Simply put, the larger the project, the better. BFA will look at projects worth $10M and up.
- Investors: BFA looks for an investor to have about 25% skin in the game. The balance may be obtained through other private investment, equity injection, mezzanine or debt instruments.
- Project credibility: A properly prepared business plan is a must. BFA can help.
- Management Team: The quality of the management can make or break a project. Good management understands the marketplace, customers, operations, and what works and what does not. Experience is an asset.