We provide financing for large-scale projects and growth-stage companies. Our Financing Program provides up to 100% debt financing for large energy projects, commercial real estate and infrastructure projects, government projects and growth-stage companies. In addition to conventional debt financing, bonds may be issued from a newly-created Special Purpose Vehicle (SPV) backed by client-provided collateral, i.e., government guarantees, bank guarantees, or other assets such as signed offtake agreements, marketable securities, precious metals, etc.
How Does Project Finance Differ from Traditional Lending Methods?
Project finance stands apart from traditional lending in several key ways, primarily in terms of its sources and structure.
1. Diverse Sources of Funding
Traditional loans are typically facilitated by commercial banks. In contrast, project finance taps into a broader range of funding sources. These include not only commercial banks but also investment banks, private equity, pension funds, and international or regional organizations. This diverse funding landscape allows for a more flexible financial structure, accommodating complex and large-scale projects.
2. Specialized Financial Structures
Unlike traditional loans, which are secured based on the borrower’s creditworthiness and existing assets, project finance often focuses on the future cash flow generated by the project itself. This model provides a tailored financial structure designed to support projects with large capital expenditure and long time horizons, such as infrastructure or energy developments.
3. Risk Allocation
Project finance is unique in its approach to risk distribution. The risks associated with the project are meticulously allocated among multiple parties, including developers, investors, and other stakeholders. This strategic division of risk can enhance the project’s viability and is often documented in a detailed contractual framework.
In summary, project finance provides an adaptable and collaborative approach, leveraging a variety of funding sources and focusing on the potential revenue generation of the project. This is in contrast to traditional lending, where a borrower’s existing assets largely determine the terms.
Program Requirements
We will consider commercially viable projects in virtually any geographic area throughout the world including North and South America, the Caribbean, Western/Eastern Europe, Australia/New Zealand, Southeast Asian (ASEAN) countries, China, India, Africa and the Middle East. Our typical loan size is $10 million and up, interest only, with a repayment period of 3-7 years. In most cases, some portion of the interest will be prepaid from the loan, allowing the borrower to focus on repayment of principal at maturity.
Costs of Issuance
We charge a tiered application fee based on the size of the project. For projects less than $10 million – $5,000: for Projects from $10 million to $50 million – $10,000; and for projects more than $50 million – $15,000. The application fee is non-refundable, however, if an engagement is signed it will be applied towards the engagement fee.
The costs of issuance are expenses paid by or on behalf of the borrower. These include: capital advisory; placement agent; bond counsel; disclosure counsel; trustee; rating agencies, bond insurers; etc. The costs of issuance can range from $100,000 – $500,000, depending on the complexity of the transaction, and must be paid in advance to retain the services of these professionals. However, as likely the only out-of-pocket expense for the project sponsor, it is much less than the capital required for most project financings.
Qualified Assets as Collateral
The key to our program is the client’s ability to provide a qualified asset as collateral, other than direct project assets such as real estate, land or equipment. Qualified assets include government guarantees, standby letters of credit, bank guarantees, offtake agreements, publicly-traded stock, precious metals/precious gems, etc. (see below for a list of Qualified Assets). Once the Qualified Asset has been accepted by our Trustee, typically a large multinational bank such as Citibank, BNY/Mellon, etc., the time to funding is approximately 90 – 120 days.
Program Benefits
- 100% project financing potential for borrower (after the costs of issuance);
- Allows borrower to raise patient capital without sacrificing equity;
- The loan proceeds can be used as debt or equity capital, investor buy-outs, down payments, re-financings, etc.;
- Ability to obtain financing quickly—usually in 90 – 120 days, or less;
- No restrictions on use of capital as long as used for prescribed purposes.
List of Qualified Assets
- Standby letters of credit, bank guarantees;
- Sovereign & sub-sovereign guarantees;
- Offtake agreements, i.e., signed purchase power agreements (PPAs);
- Marketable securities, i.e., stocks, bonds, preferred shares of stock, index funds, or ETFs;
- U.S. Treasury bills (T-bills), bonds, mutual funds, and money market funds;
- Retirement investment accounts: 401(k)s, IRAs, etc.;
- Pensions, annuities, royalties;
- Certificates of Deposit (CDs), promissory notes;
- Gold, precious metals, precious gems, jewelry, artwork, collectibles;
- Hard/soft commodities, i.e., oil, natural gas, minerals, corn, wheat, etc.;
- Business inventory.