Financing Power Projects in Africa
Master the use of Project Finance and other options for financing large scale projects in the power sector
This highly practical and interactive programme will enable you to:
- Evaluate the various debt financing options for a project, both on a Project Finance basis as well as other corporate debt financing options
- Understand the motivations of key stakeholders in projects and implications for the financing approach
- Identify, evaluate and allocate of key risks in Project Finance
- Review and sensitise a financial model in the context of a power project
- Assess risk and return issues for both debt providers and equity investors in the project in order to develop an appropriate capital structure
- Produce a summarised Term Sheet for the debt finance for a project
- Build your knowledge of practical application through case studies and exercises from real life Power projects
- Learn from our highly experienced trainer to understand the key tools and techniques for Project Finance in the context of your industry
- Benefit from a highly experiential learning environment
- Share current issues and challenges with colleagues from across the power industry
What is the programme about?
Securing finance for even the most well researched and robust power projects can be challenging. Understanding how to analyse the risks, structure the finance and where to look for it is vital for success. The highly practical 3-day programme is a must attend for anyone who understands the value of developing a robust financing plan to ensure long term viability.
There will be a pre-course assignment which will be used as a basis for reviewing key aspects of Project Finance on the first day of the course and the potential use of Project Finance by corporates.
During the course there will be a heavy emphasis on a structured “step by step” review ofone or two core case study(ies) as a method of learning, supplemented and illustrated by examples of “real life” transactions.
Practical Power Case Studies
Core case studies will be used with a focus on the power sector, in both fossil fuelled and renewable energy. These will be supplemented with other examples of “real life” Project Finance and corporate transactions with a focus on the Power sector.
This programme will be relevant to a wide range of participants working for organisations involved in the power sector including:
- Commercial Managers
- Project managers and engineers
- Corporate Treasury
- Lawyers and other professional advisors
- Investment Managers investing in project backed bonds
- Personnel in banks in the following areas working with companies in the power sector
- Credit risk analysis of corporates involved in Project Finance
- Credit portfolio management
- Corporate Banking Relationship Managers
- Origination teams in debt and equity capital markets
- Syndicated loan teams
- Development Finance Institutions
- Export Credit Agencies
- Equipment manufacturers
Start of day: 9.30am
MODULE 1: A brief review of key influences on corporates' debt financing decisions and Introducton to Project Finance
Module objective: to reinforce participants’ understanding of key factors in the capital structuring decision.
Capital structuring decisions
- Debt vs equity considerations – risk and return
- Credit rating and debt structuring issues
- Debt pricing – how banks look at risk and return – principles of Risk Adjusted Return on Capital (RAROC)
- Review of background on the Capital Structure of selected companies, and their use of debt finance
- Exercise: participants assess the impact on a company of different leverage and financing
Introduction to Project Finance
- Discussion based on the pre course assignment
- Review of fundamental aspects of Project Finance, including the use of Project Finance vs other debt financing options and the roles and motivations of key project stakeholders
MODULE 2: Risk analysis and allocation in Project Finance
Module objective: to reinforce participants’ understanding of key risks inherent in a project, typical mitigants and risk allocation.
- Key risks, mitigants and risk allocation
- Construction related
- Operational phase
- Financial risk exposures / Capital structure
- Renewable vs non Renewable energy based power projects – relative economics
- Lessons of experience in terms of key risks – background data on principal reasons for projects , including Power projects, facing difficulty
Case study – rating a Project Finance transaction and developing a rationale for involvement in a project.
Participants prepare a summarised Rating for a project ( debt perspective) • Participants prepare a summary of the key risks and mitigants for an assigned project
MODULE 3: Development and financial analysis of the projected operating performance and key drivers
Module objective: participants will be provided with a spreadsheet template that will be used throughout the training, and selected information on a project, as a basis for developing forecast assumptions, building the operating cash flows for an assigned project and sensitising key financial drivers of the project to assess the impact on the Project IRR.
Reviewing the project financial statements
- Developing the underlying assumptions
- What is the benchmark for the sector?
Developing the operating cash flows
- Key elements of building a financial model
- Key outputs of a model from an equity, debt and user perspective and key Project Finance financial ratios
- Sensitivity techniques
Reviewing and developing the underlying assumptions – participants review and develop background on a project to assess, develop and sensitise the underlying assumptions and the impact on the Project IRR
Close of day: 5.00pm
Start of day: 9.00am
MODULE 4: Sources of debt financing in projects: financiers and their objectives
Module objective: to enhance participants’ understanding of developing a debt structure, key features of various debt products and the impact of the credit crisis.
- Impact of the “credit crisis” on Project Finance
- Use of Project Finance: Project Finance vs. other debt financing options for projects – corporate debt, Borrowing Base facilities
- Structuring Project Finance:
- Tailoring the debt to reflect the operating cashflow profile for the project.
- Involvement of political risk insurers - Export Credit Agencies and Development Banks
- Interest and foreign exchange management issues in Project Finance.
- Review and develop the debt structure for the assigned case study and sensitise the DSCR to reflect key operating operating and financial risks.
- Decide on the financing approach in terms of the potential involvement of potential debt providers to a project iii. make recommendations on pricing for the debt financing.
MODULE 5: How equity investors assess projects - financial yardsticks used by investors
Module objective: to reinforce participants’ understanding of risk and return issues from an equity perspective including evaluation of equity investors’ relationship with the project company and how this can provide incremental income and developing objectives for maximising cash based returns from a project.
- Understanding the equity investor’s approach to achieving returns from the project company, including operating relationships with the project company, and cash extraction through re – financing
- Exercise: development of the Capital Structure for an assigned project as a basis for developing a capital structure that meets the objectives of both equity investors and debt providers
MODULE 6: Documentation for Project Finance
Module objective: To reinforce participants’ understanding of the key elements of debt financing documentation and risk mitigants from a debt provider’s perspective vs. the desire of equity investors to minimise recourse beyond the project being financed
- Review of the key commercial issues to be covered in Project Finance term sheets
- Rationale and structure of loan documentation.
- Intercreditor issues.
- Third party credit support and security issues for debt financiers, including critical commercial issues in offtake agreements, fuel supply agreements, O&M agreements, construction contracts, and shareholder agreements.
- Exercise: participants develop a summarised Project Finance term sheet
MODULE 7: Presenting a proposal for investment in a Project Finance
Participants consolidate the information developed during the course to produce a summarised recommendation with respect to a Renewable Power project
Course summary and review
Close of day: 4.00pm
Each day has two 15 minute refreshment breaks and one hour for lunch