Carrying out a successful project financing by optimising the time and minimising the risks
Project finance (PF) is a method used for financing highly complex structures, characterised also by the involvement of private sector bodies. The financing of each project is evaluated solely on the basis of its capacity to generate cash flow and profit sufficient to reimburse equity investors and to repay financial debt. Usually the financing recipient is an economic-legal entity (Special Purpose Vehicle or SPV), established for the purposes of carrying out a specific project.
PF is used in the context of public private partnerships (PPP), that representa specific form of cooperation between government and one or more private sector companies, that aim at guaranteeing the sources of financing, the construction, the refurbishment, the management and the maintenance of an infrastructure or at submitting services that are in the public interest.
Since the early 90’s, the importance of PPP has been growing as a consequence of governments’ efforts to minimise investments in infrastructures and other public goods in order to comply with the Maastricht criteria.
In addition, PPP is commonly used when public bodies are not able to raise necessary financial resources or when they lack the required knowledge and competences to carry out the projects. This way, PPP guarantees the fulfilment of public interest (assured by government supervision) and the provision of resources (financial, infrastructural, “know-how” and human) supplied by private bodies.
Usually, PPP is mainly characterised by:
- a long term partnership, which implies a cooperation between the public and the private sector relating to different aspects of the projects to be carried out;
- a particular method of financing, partially provided by private bodies, through complex arrangements that involve several parties. Often, part of the financing is contributed by the public sector;
- the important role of the private sector during different stages of the project (i.e. financing, development, engineering, building, operating). The public partner is mostly in charge of defining and monitoring the targets to reach, in terms of public interests, quality of supplied services and pricing policies;
- an improved risk allocation, characterised by an enhanced involvement of the private sector on which part of the risks are transferred;
- a wide range of guarantees provided by private bodies.
Over the years, VFH has provided advisory services to numerous clients, pertaining to both the public and the private sector, carrying out project finance deals.
With regards to PPP, we support the public sector in planning and coordinating project financing operations, in terms of :
- assistance to public administration in valuation of offers, during different phases of binding procedures (definition of transparency and competitive procedures, preparation of tender documentation, offer valuation) on all aspects of offer valuation, negotiations and contract drafting;
- assistance to promoters in the phase of proposal presentation (preparation and certification of economic-financial plans, agreements, etc.) and to other parties during the presentation of competitive offers (opportunity analysis, financial modeling and evaluation, optimisation of the financing mix, assurance and guarantees, legal, fiscal and contractual aspects);
- assistance in establishing a special purpose vehicle;
- assistance in building the financial structure of a project and in selecting and negotiating with credit institutions.
In particular, during fund-raising process, we provide assistance in arranging competitive financing structures in PF and in selecting a suitable syndicate of banks on the basis of our clients’ necessities and in order to obtain competitive conditions offered for a specific form of a financing.
How VFH delivers value add and why we differ from credit institutions
- Extensive experience and knowledge of the sector
- Our experience, gathered through numerous projects in PPP carried out both in the public and private sector, allows us to offer clients our knowledge and vast connections with the main players in the sector;
- Established experience in predisposing complex financial models
- PF requires specific competences relating to the predisposal of complex financial models in order to support the funding activity and to arrange the most suitable financing structure. VFH relies on an extensive track record containing more than 32 projects carried out both in Italy and abroad;
- Searching for the most suitable sources of financing;
- As an independent adviser, we reconcile our goals with our clients’ needs;
- Extensive knowledge and understanding of our clients
- As we usually work for both the private and public sector, we have an extensive knowledge of their aims and constrains;
- Global network
- Our global experience enables us to exploit competencies gained in an international environment in order to successfully carry out an operation worldwide.