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Project Finance | The Difference
Unlike M&A, VC, mezzanine or any other financing structure, the project finance structure is not dependent on the assets or balance sheet of the borrower. Nor does it rely on the marketing and financial forecasts of the borrower that can be influenced by future random events. 'Project finance' is unique in that the investor and their underwriters lend against the track record and financial stability of whoever is contracted to buy the output from the built project be it energy, hospitality, infrastructure or any other sector. After seven decades of evolution, today's project finance structure bears no relation to its 1950’s iteration, when it was developed by leading institutions to finance large-scale infrastructure and industrial projects. Now, project finance can be defined simply as lending against revenues from a yet-to-be-built asset, which specifically precludes mainstream banks through their own regulations.
The global, $multi-trillion project finance market is now led by tens of thousands of asset managers, family offices, private equity/debt, hedge, alternative investment and other funds, collectively known as the 'private markets'. It is the only financing that delivers inherent risk-mitigated long-term returns that these funds and their investors seek. Now enhanced with A+-rated insurance Wraps backed by Lloyds-of-London and other leading insurance markets.
But, with thousands of funds trying to identify projects from the thousands seeking capital, the market was failing because tehre was no marketplace through which investors and projects could identify, connect and engage with each other.
PFX is now three years into its long-term objective of consolidating this $multi-trillion market, where individual project finance transactions often exceed even the largest IPO's on any stock exchange. We are a long way towards bringing structure into the market, making project financing as seamless as any IPO.
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