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Interviewing For Infrastructure Investment Roles

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There seems to be a growing interest in infrastructure on WSO and I've seen a number of posts inquiring about the recruitment / interview process for infrastructure specific funds. I've had a number of people help me out in this area so I thought I'd summarize what I've learned with the hope that someone finds it useful. For those who are thinking about recruiting for a buyside seat in the infrastructure space, you've probably realized that there aren't a lot of infra specific prep resources out there. I'm going to try and cover the broad strokes and hit on things that I think are particularly important, but happy to address more specific questions to the extent that I can. Most of what I will focus on is specific to 'why infra' and the case study as I believe these aspects are really what separate an infrastructure process from a more traditional PE interview .

The intention of this thread is not to provide an overview of infrastructure, but I would encourage anyone who hasn't already to take a look these threads:

https://www.wallstreetoasis.com/forums/overview-of-infrastructure-private-equity

https://www.wallstreetoasis.com/forums/renewable-energy-pe-overview

https://www.wallstreetoasis.com/forums/qa-infrastructure-pe-ibd

Know What You're Looking For

The great thing about infrastructure is that its definition has become so broad. Power & renewables, utilities, airports, toll roads, hospitals, data centres. All infrastructure. As a junior you can get a breadth of industry experience without siloing yourself. However, this can be a bit overwhelming especially if you've never worked your analyst years in infra. My advice for anyone looking to jump into the recruitment process is to have conviction in your story and what strategy you're targeting. There are a ton of large cap players who have generalist programs, but there are also a lot of MM /UMM shops who are refining their strategy into more specific segments of the infrastructure space. As you can imagine, if a shop is running lean it can be fairly challenging to be effective in all areas of the infrastructure spectrum and so these places are choosing to get really smart on 2-3 subsectors. The reason I bring this up is because a lot of the household name megafund infrastructure programs still put a big emphasis on pedigree. There are quite a few MM shops that I've seen hire individuals from less traditional backgrounds and if you can demonstrate your interest in a particular industry / strategy, you can probably position yourself favorably in a process where you're not competing against the BB / EB analyst who went to H/S/W. Of course landing a role at Blackstone Infrastructure would be phenomenal, but there is only a small subset of us here who would get their foot in the door. That being said, the learning opportunities at some of the smaller funds is just as good and these should not be overlooked.

Show Interest

If you're interviewing for an investment role, your interviewer is going to want to see that you can put your investor cap on and speaking intelligently about infrastructure. For those who spent their analyst years in infrastructure, expect to get grilled on the specifics of your deals. This is no different than the expectations that would be set in a more traditional buyout shop interview. If you've spent time in the infra already, you also know the lingo. This is where I think people who haven't worked in the space are behind the 8-ball. If you are really interested in infrastructure but haven't worked in the space before, the bar is naturally going to be set lower heading into a conversation. If you spend the time getting to understand the industry and demonstrate genuine interest in a subset of the space you will stand out. I can't tell you how many people I've seen stumble through a response to 'Why are you interested in infrastructure?' or 'Can you tell me what trends you're following in the infrastructure space?'. You'd think this would be a no brainer, but apparently not. If you haven't worked in infra and can't demonstrate that you've spent any time reading up on the industries that interest you, what reason do I have to push you forward over someone else who can probably hit the ground running? If I see an analyst from a non-related industry group who can talk passionately about infrastructure I'll generally walk away feeling good about that interaction. It's no secret that ambition and curiosity go a long way.

Modelling Test / Case Study

This is where I think the interview process really starts to diverge from your traditional buyout process and where I see most candidates struggle. There are a few different mutations of these case studies, but they generally aim to test the same skills. Before I jump into the specifics, I want to highlight that some infrastructure funds will administer a case study that is akin to what you'd receive at a buyout shop (i.e. your LBO modelling test ). The purpose for doing this is that they can assess one's excel capabilities / financing knowledge and not handicap anyone for not having worked in infrastructure before. For those of you who spent your analyst years grinding through project finance and tax equity models, it is worth mentioning that you may want to practice a few of the more traditional LBO-style case studies. While the modelling isn't hard, it is a bit different than what you're used to doing, and under a time crunch you want to be sure that you aren't putting yourself at a disadvantage.

Case Study Type 1: Traditional LBO

As mentioned above, some of the bigger funds have been known to administer the LBO style modelling test. Typically you are provided with 3-4 hours to complete this test where you would be asked to build a 3 statement LBO model accompanied by a powerpoint deck. There are a ton of guides out there on how to complete these and numerous threads with individuals trading old cases.

If you've never built an infrastructure model a lot of what I'm about to say isn't going to make any sense. Totally normal, but you have some work to do. Ed Bodmer has a video for basically everything project finance / infrastructure modelling related. You can find his resources here: https://edbodmer.com/project-finance-exercises/

Case Study Type 2A: Short Form Construction Stage Infrastructure Model

This is a fairly common infrastructure modelling test where you will also be provided 3-4 hours to complete a model and presentation. Within this type of case, there are three mutations of a case study that I've seen. The first mutation, what I'll call "Type 2A" is a construction stage, fully/partially contracted infrastructure asset. In this type of case study you will be given some or all of the following assumptions and be asked to model out returns. This is an example of an actual prompt I received for an infrastructure test (I can't remember the exact numbers so I'm using dummy figures to get my point across)

• Assume you are a developer who is constructing a solar asset with a 1 year construction timeline and an asset that will have a 30 year useful life
• The cost to construct this solar asset is $500mm spread evenly over a 12 month period
• The project has a nameplate capacity of 200MW and the asset will expect to produce power at a gross capacity factor of 30%. Assume degradation of 0.25% per year.
• The asset has arranged a 15-year power purchase agreement at $100/MWh without any escalation. Assume the post-contracted pricing for the power produced after the expiry of the PPA is $85 in real 2022 dollars escalated at inflation.
• Opex for the project is contracted under a full wrap EPC at $25mm per year escalated at inflation.
• Assume a tax rate of 25%
• Assume the asset is depreciated on a straight line basis over the useful life
• Assume that you procure a construction facility at 70% gearing, which will be refinanced by a long-term debt facility sculpted to contracted cash flows at 1.30x DSCR (interest rates for the facilities will typically be provided)

Based on this information, you would be asked to build out the construction spend profile, the construction debt draw downs, an operating model consisting of the generation profile, tax & depreciation, sculpt the long term debt that is used to refinance the construction loan, and calculate returns / sensitivities . The amount of time you are allotted will vary based on the complexity of the prompt. This type of test can also be based on a concession based asset with an availability payment (e.g. a toll road concession P3 with a government).  

Case Study Type 2B: Short Form Operating Stage Infrastructure Model

This version of the case study is a bit easier. Generally the assumptions are very similar to what you'd get provided above, except you are modelling out the acquisition of an operating asset. In prompts like this that I've seen, you'll typically be given the assumptions required to build out the operating model, and then will get asked to sculpt a back leverage financing to get to some form of a post-tax levered return. Based on the assumptions provided you'll get asked to back into what you would pay to acquire the equity in the project given a return requirement of xyz%.

Case Study 2C: Long Form Infrastructure Model

This version of the case study will typically span over a weekend where you'll have 48 hours to build a model and prepare a more fulsome set of presentation materials. Basically a mock IC presentation. In instances where these prompts have been issued, it's typically the build of a financial model to value a publicly traded name. In order to occupy two days of someone's time, you generally need quite a bit of information and so going with a public name is easier. In this instance you generally won't have to build an infrastructure-like model described in 2A/2B above, and can focus on a more traditional DCF / public comps analysis. Generally the infrastructure names that you'd be given are operating platforms so you are valuing a broader company as opposed to a specific asset. I've actually seen a fund prompt candidates with a 1 week timeline to complete a case with materials comprising of 20+ slides. This is rather excessive and definitely not the norm.

Career Longevity

Not specific to the interview process, but I thought I'd provide some additional color on why I think this space is great to be in from a career longevity perspective. Infrastructure is seeing significant growth right now, and there are various pockets that can expect to benefit from decade long tailwinds, particularly in light of medium-long term carbon reduction targets. From a macro lens, the broader sector that underpins your job is incredibly stable, which is great to hear for us risk-averse PE lemmings. From a micro/job specific lens, because the technical skillset you develop in infrastructure is a bit more niche, it becomes less common for these platforms to develop a two-and-out program. It's a lot more efficient to train up an associate and promote them. You'll also find that a lot of infrastructure funds don't often hire MBA grads for this reason and typically promote from within. I've seen a lot of mid-to-senior level lifers who never pursued the MBA because they were just promoted directly. This is a trend that I think is becoming more common in buyout funds as well, so maybe not an infrastructure thing.

I'll pause here for now, but hopefully some of you who are interested in pursuing an investing career in infrastructure find this useful. Happy to answer any questions or expand on areas which I may have glossed over.

Thank you so much for this write up, very helpful. 

This is incredibly helpful thanks for writing. Wondering if there is some overlap between industrial and infrastructure funds and can industrial bankers recruit for infra funds?

Happy it helped. Yes there are certainly some overlaps especially given the broadening of what we define as infrastructure. Funds who invest in core plus opportunities will also get looks at infrastructure-linked businesses which might see overlap in industrials. 

Do you think it's possible for someone who works in secondary/co-investing space in infrastructure to go to a more direct role if they have some modeling experience or banking is basically required?

Fantastic writeup, I always try to read everything infra related on WSO .

One question I had, and this is going to be somewhat difficult to answer since infra overall is so broad, but what are some ways to better follow trends about what's going on in the space? Obviously each subsector (healthcare, telecoms, power/utilities, transportation, etc.) is going to be drastically different, but what are some news sources or anything of that nature that you follow to learn more about the way things are going? It's a niche enough space still that articles in WSJ and whatnot are pretty rare.

Thanks, I really appreciate that. I've been spoiled if I'm being honest - I had access to Infrastructure Investor and InframationNews since my analyst days which is where you get a lot of information on deals being closed and funds being raised. I also had access to a lot of proprietary thought leadership through my previous role, and in my current role banks are always pitching ideas and sending industry reports to us. I empathize with the fact that there isn't a lot out there that is free... if I had to try and find trends or something along those lines without my fund's resources at my disposal, I think the first place I would look to are investor presentations from one of the larger funds that are publicly traded (i.e. Brookfield, Macquarie , etc.). Typically these larger funds are first movers and trend setters so they'd be a good starting point outside of scrubbing the generic news outlets as you've mentioned.   

Thanks for the write up.

Any thoughts on the challenges and best approach to moving into an Infrastructure Equity Fund from a large international Sponsor/government procurer? Particularly at Director/Senior level?

Not particular to infrastructure, but I think the general rule of thumb is that as you become more senior it becomes increasingly challenging to move roles especially if you are looking transition into something different. It's somewhat difficult for me to opine on your situation because there are a number of different roles within government functions that facilitate the procurement process on infrastructure assets. Without any context I would say that you have to play to your strengths. I've seen a number of individuals at a more senior level move from transaction finance-type roles at advisory firms or government entities to LMM infrastructure funds, albeit taking a haircut on title. Depending on the role I think there is some overlap in skillset when it comes to managing workstreams, marking up legal documents, reviewing P3 financial models , etc. To make a direct lateral move at a director level, I think you'd have to demonstrate your ability to source and lead transactions, which is not realistic coming from, what is my interpretation of, your background.

Great thread and a great space to be in. 

You are a king and a beast bro, started process a few days ago and needed EXACTLY this :)

Hi, really appreciate you making this, I have a bit of a unique situation in that I'm not coming from an industrials or infrastructure coverage group, however, from a LatAm group at a BB , I work frequently with infra since this is the main line of business in the region so I understand PPPs and all the related infra jargon and regulations, I also speak the relevant languages for the region, I'm a non-target though, so what do you think would be the best form of entry for someone like me? Thanks again for making this post.

I think you're in a good spot - being in a generalist group isn't a bad thing, especially if you're interested in pursuing infrastructure and have gotten infrastructure experience. You've got a BB brand name on your CV and it sounds like you speak Spanish, which definitely works in your favor. I wouldn't worry about being a "non-target". Sure it might be harder to get an interview at some top MF's, but it isn't impossible and there are a ton of funds who would give you a look based on what you've described. 

Hey, thanks for making this! I'm starting a process soon and in one of my initial interviews, was told to prepare paper/pen/calculator. Do you have any idea what kind of math questions might be asked in an infra fund interview as opposed to corporate PE?

Only thing I can think of is a paper LBO , but usually you're asked to do mental math here. Not sure, sorry!

Really appreciate the write-up! It was very insightful. I’m curious if it’s common/ difficult for energy/ Houston IB analysts from top BBs / EBs to pursue an exit into the broader Infra funds that you mentioned. I am interested in the feasibility of transitioning into Infrastructure on the buy-side.

Can't speak to the feasibility or the difficulty of making that move because I haven't gone through it, but I have seen this done on multiple occasions. Anecdotally it's been analysts from top banks in Houston joining large cap infrastructure platforms. There are two factors that come to mind when I think about why this is: 1) there is likely a smaller pool of energy bankers interested in infrastructure and so naturally the pool of energy bankers represented in infrastructure is going to be lower and 2) large cap platforms that recruit on cycle are generally more open to bankers from different industries so long as they check a number of the boxes (top school, grades, brand name bank, etc.). Off the top of my head I can't think of anyone in my circle who has made that move to a MM fund, but nothing is impossible.

Thank you for the response and information! Looking forward to starting off my career in HOU IB and exploring from there.

Have seen this move multiple times (from MM-ish banks so assuming BB / EB move would be simpler). Echoing OP's comments, having that energy (not renewable) skillset is not that common at top infra shops but still there (look at Brookfield/GIP associate classes). Also, funds are still looking at midstream opps given potential dislocation due to ESG -related outflows from the sector and the need to ensure energy resilience in the U.S.

Do infra funds hire MBB if you can model LBOs+demonstrated interest?

This definitely isn't common and I personally only know one person who has moved over from MBB to a mid-market infra shop. I think infrastructure investing generally places less focus on operational strategy, which is where an MBB consultant can probably provide more value. I also just did a quick Linkedin search for anyone living in NYC who currently works at the usual large cap suspects, who has identified that they work on the infra platform, and who was previously employed at McK, BCG and Bain and didn't see anyone who went Consultant/BA > ASO1. Would defer to anyone else who has made different observations. All that to say though I don't think it's an impossible move to make - infrastructure isn't rocket science and with adequate preparation and networking I don't see any reason why you wouldn't be qualified to do the job.

FWIW, I've met several people who are coming from renewable energy consultancies, who dealt directly with buy-side infrastructure shops make the jump. Maybe a case to be made if you worked on that specific niche within MBB /leveraged a client relationship to make that jump

Thanks for the write up. Have you seen people make the jump to infra funds from Public Finance ? My team focuses on P3 projects in the transportation space mostly. 

Love seeing infrastructure get some love on this forum. Especially a high-quality and accurate write-up. I work in renewables infra and it's a super cool space.

Good write up. Not to hijack but am joining an MF's infra fund this summer and happy to answer any questions as well. Currently AN2 at a BB in NY in a non-infra coverage group.

Hey, do you mind if I PM you a few questions? 

let's keep it public (and my account private), happy to help in this thread!

How do you transfer from a non-infra coverage group to an infra fund? I would think they'd only hire from P&U/Transpo groups. How did you sell them?

many of the MFs hire from all coverage groups since their mandate is so broad, especially with the explosion of digital infra. for example, if you look at team pages you'll see a lot of people with TMT / tech investing ( warburg , silver lake , etc.) backgrounds. i imagine those with narrower mandates (e.g. pension funds) are more focused on traditional infra backgrounds.

in terms of selling them, i think if you show an interest in the macro space, as well as an understanding of what infra is (and isn't) you should be good to go. at the end of the day, a platform is a platform, whether in infra, consumer, healthcare, or any other space. 

Thanks for keeping this public. The big question a lot of us will have is what is the general comp structure for infra at the MFs (assuming you interviewed at more than one and can provide some comparisons)?

same as PE at the associate level for MFs (~350k AS1). i don't know how carry compares as im not senior enough, but there are two offsetting factors:

a) returns are structurally lower, which lowers the carry pool

b) AUM per IP tends to be higher (my fund has close to $1bn), which increases your carry allocation

so could go either way.

What have you seen in terms of people transitioning from project finance to infrastructure PE? Are there a lot of people with that background?

I most likely have an interview for a 2022 FT role with for an Infrastructure group coming up. I am currently an undergraduate student with very little/no experience in infrastructure. I was told to be prepared for technicals and a possible case study.

The case prep seems like it is targetted towards experienced hires. Any changes to your advice for an undergrad?

I just went thru an infra PE process (got offer) and can help you out with a mock interview + some general advice. 

PM me if you're interested, no pressure.

Hello Lamron,

Will be you able to extend this offer to me. I am in the infra recruiting process

I would say that it would probably be pretty difficult. Typically most post-MBA associate / senior associate roles are given to candidates who have previous infrastructure, PE or relevant M&A experience. Typically on any given mandate, the extent to which we would interact with a group like yours is to lock in a rate hedge on a financing or hedge fx on something cross-border. Someone reviewing your profile at an infrastructure fund is likely going to come to the conclusion that there isn't much overlap between your role and what you would do at an infra fund. Never say never though!

I have a first round with a secondary infra group and this helps out a lot. Even if I don't get the role this definitely helped me get a better idea of what infra is like so thank you, cheers.

Thanks for the insightful discussion! Do you have any recommendation on good source to learn on infrastructure modelling?

There are quite a few resources out there offered by the training platforms, but they're kind of expensive. F1F9 and Corality are popular ones and I think offer individual seats for in-person group lessons where they'd tour major cities and run 3-4 day programs. This was pre-pandemic though so I'm not sure if they still run these.

Separately, the Ed-Bodmer resource which I've linked in my original post is about as good as it gets when it comes to free modelling resources. Ed covers basically every topic under the sun and is a great place to start.

Ed Bodmer is good with some neat Excel tricks (ALT + EIS being one) but a bit disorganized. When I really wanted to get good at modelling, I remember I just went through a ton of his videos and took notes - treated it like a course (in my first year of banking). 

No better practice than actually being in the model with a MD coaxing you on the phone though

Good thread. Biased because I wrote out most of the answers here but would add this as a link in regards to some hopefully helpful discourse on framing valuation with an infra asset:  https://www.wallstreetoasis.com/forum/private-equity/exit-multiple-term…

Thanks for the very insightful post! What do you think are the most critical skillsets to develop/have for someone who wants to break into infrastructure?

Also, do you mind to share how's the day to day like for infrastructure investment professional? E.g. what do you don daily basis besides working on financial model?

I would love to know about the WLB across the different types of infra funds.

infra IB tends to be quite sweaty due to the heavy modelling and legal and technical processes involved. Likewise I’ve seen top fund such as KKR /stonepeak to top pension funds just as OTPP and omers working insane hours constantly which is probably not something I find personally sustainable.

however I’ve seen people at lesser known pension funds, smaller PE shops , infrastructure arms of insurance companies, sovereign wealth funds have great hours with less pay. Also potentially in the infrastructure private debt space (although know less about this area)

would love to hear your thoughts 

Good question - I would say that some of the reasons you've listed that cause infra IB to be sweaty are also applicable to the buyside. The WLB at any given fund is going to almost always correlated directly to strategy / appetite to deploy capital and there are pros and cons to this. If you work at a fund that is trying to aggressively deploy capital are you going to get a great experience? Yes, mostly likely. Will you get paid a lot? Probably otherwise how will these places attract talent. Are you going to work a lot? You bet. Is it sustainable? Depends, but I would agree with you and say probably not...

Some of the lesser known pension funds likely don't have the capacity to do direct investing and do mostly co-invest/fund investing which is less demanding in comparison to diligencing an actual business. Smaller PE shops tend to look at things with a bit more hair on them and don't necessarily do as many deals which could result in better hours. SWF - depends on the fund, I've heard some groups are sweatier than others. All else equal credit in general tends to have better hours based on my understanding. 

Everyone is going to have different career and life objectives - the fact of the matter is if you want a good experience in the infra space you're probably going to have to grind for a few years. My personal view on this is if you want a long term career in infra, I think you should put in 4-6 years and get a solid experience and brand. If you really like what you're doing you can stick it out and make great coin, but if you decide you want more WLB you can take a step back and find another role in the space with a strategy that isn't as demanding on resources.

Thanks for the write-up. Can you speak about exits from MF /UMM infra funds? If the associates find out later they want to do generalist PE or HF instead, how difficult would the transition be?  

It really depends on the platform you work in. As an extreme example, if you're working in a sector specific platform that only invests in renewables you may have a hard time moving to a corporate PE / HF role because the way you would evaluate those types of investments is different. If you worked in a generalist role where the definition of infrastructure and private equity are blurred, you likely won't encounter any issues trying to make the switch (I've seen it happen many times).   

Any chance you could shed some light on OMERS / OTPP Infra teams / anything you know about them? Would greatly appreciate it.

Happy to provide some high level thoughts based on what I've heard. Anyone with better information please feel free to correct me, and don't quote me on any of this as it could be outdated.

OTPP's infrastructure team is primarily based out of Toronto and London, UK. I would say they are probably the most active out of all of the Canadian pension funds on the direct side, and if I was juggling offers between the Canadians, I'd take it over OMERS or CPPIB. I say this because OTPP are generalists on the infra side whereas CPPIB bifurcated its renewables/energy transition investments and their core infra group, so your sector experience may be handicapped; the latter group also has major toll road concentration which could dictate sector focus in the near-medium term if you joined them. I still think OTPP buckets infra and NR into the same team, but I don't have any purview into the nuances of their team structure to be able to comment on what kind of exposure you'd get. If you plan on being in Toronto they are also moving from North York to downtown if you ascribe any value to that. Based on my understanding, I think OTPP is also more advanced in its approach to managing its portfolio with the advancements they've made in building their value creation team. 

OMERS also does a lot of direct investing in the infra space, but their platform isn't as robust as OTPP. They have also had quite a bit of turnover in recent time which probably isn't a good thing. They have a strong presence in NYC as well. I don't believe they have the equivalent of a value creation team and IP's are responsible for asset management to my knowledge. Apparently OMERS also used to offer carried interest on the funds they managed but I've heard through the grapevine that this structure may be changing.

If you have any specific questions I can try to be more direct, but hopefully this gives you something to chew on for now.

Thanks so much - just sent you a DM!

On the topic of the Canadians, do you happen to know anything about PSP's infra practice?

Anyone interested in sharing costs on WSP project finance course? Heard it’s pretty good

Would you be willing to share you answer to the sample model test you outlined above?

Hey, do you have an opinion on infrastructure debt investing at a place like Allianz GI?

Awesome post! Infrastructure PE has always been a dream of mine but for now I’ve been working in DCM commercial real estate. Do you think I could transition to infra PE after completing my MBA ? I’ve heard that real estate modeling is similar to infrastructure modeling. My firm specializes in industrial, large retail, and multi family properties. Would appreciate any advice! Thank u.

Thanks - yes there are similarities to real estate modelling. You don't really see a lot of post- MBA hiring at the low to mid market funds because these places don't have the capacity to train you. Some of the larger mega funds and institutional infrastructure investors have grad programs which would be worth applying to. 

losing interest Some of the larger mega funds and institutional infrastructure investors have grad programs which would be worth applying to. 

are you referring to post- MBA type roles (i.e., Aso)?

Which valuation method can be used to best value infrastruction assets and how does that method differ from PE

Hi, does anyone have a viewpoint on asset management roles in these infrastructure funds?

This is a solid post for anyone that has an interest in infrastructure and needs a quick 101 on the industry.

One thing I would add in the "Know What You're Looking For" section is knowing the differences between the different infrastructure strategies, namely Core / Core+ / Value-add / Opportunistic, and how investing in those strategies look and change between the mega-funds, UMMs and true MMs . 

On top of that, do you want to solely focus on a specific region? Working at a North American-only firm will provide a vastly different experience than a firm that targets investments globally. 

Why I like infrastructure:

• Tangible assets that create tangible effects on a population / society (i.e. a waste collection business).
• Potentially complex regulatory factors (i.e. local/state permits, sector-specific permits, government agencies as counterparty)
• Modeling generally makes intuitive sense (i.e. # of unit measurement, $/unit, annual contract escalations, capex , additional project economics )
• Ability to look at "next-gen" companies that are at the intersection of traditional infra and technology

- VP at MM infra PE firm

How would you view someone with infrastructure co-investments experience when they recruit for your fund? I know it will be difficult but wondering if it is possible to go from co-investments to a more a direct role.

Assuming this would be an associate position? I think the background and industry knowledge would be a big positive. It would also depend on the co-investment style of your current firm. Are you guys pretty hands-on during diligence? More passive? What type of independent analysis do you run? Do you consult with outside consultants? Do you just regurgitate the PE firm's IC memos? 

If you can prove that you've had solid investment and diligence experience and are hungry to join a direct investing firm (and know how much work that entails), I think you'd be a pretty good candidate.

How open are US PE firms to international hires with relevant experience?

any chance u can name some funds thats focus on power/utilities/pipelines and anything of that nature

Blackrock 's global energy & power infrastructure strategy 

Energy Capital Partners

Brookfield Infrastructure 

I believe KKR does some them too but not sure if its their energy team or infra (likely the former) 

GIP (not sure how their recent foray into digital will chance their focus since historically they focused primarily on power, utilities, midstream and transport) 

Stonepeak (did a lot of midstream in earlier funds but now doing more telecom, value-add deals) 

I'm sure I'm missing some of the MMs in the space (Alinda maybe but dont think they do midstream anymore) 

Great write up! Would you be able to please provide some names of renewable-focussed funds, or point in the direction of where to find this information (such as Inframation)?

Incredibly helpful post! I would only add that many large cap funds (Stonepeak, GIP) are now starting to get divided into industry verticals with limited cross-pollination between teams. What would you recommend to someone in Infra PE focusing on one vertical (e.g., power) and trying to lateral into a generalist role or another vertical (e.g. digital, transpo, energy transition) at the SA /VP level?

  PE PE 1st Year Associate in Private Equity - LBOs "> Associate 1  in  PE - LBOs 1y [Comment removed by mod team]

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• Harvard Business School →
• Faculty & Research →
• June 2014 (Revised July 2014)
• Background Note
• HBS Case Collection

An Overview of Project Finance and Infrastructure Finance—2014 Update

• Format: Print
• | Language: English
• | Pages: 42

About The Author

Benjamin C. Esty

Related work.

• Faculty Research
• An Overview of Project Finance and Infrastructure Finance—2014 Update  By: Benjamin C. Esty, Carla Chavich and Aldo Sesia

• Video Tutorials
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Project Finance Modeling & Infrastructure Modeling

How to Master Cash Flow Projections, Debt Sculpting, and Infrastructure Asset Modeling - So You Can Ace Your Project Finance Case Studies and Win Offers

Evaluate infrastructure deals like a pro.

You’ll evaluate the risks and rewards and make investment recommendations

Master financial modeling

Model solar, wind, gas, nuclear, toll road, airport, and mining assets

Complete 8 case studies

Build 4 shorter “crash course” models and 4 detailed “on the job” ones

View short course outline  or scroll down for the details

Join Our Community Join the 56,763+ students and professionals who have already used our training to win interviews and job offers Ace Your Interviews Get everything you need to answer technical questions and complete case studies with confidence Get Expert Support Unlimited access to course files, 5 years of support/updates/video access, and a 90-day money-back guarantee Outperform At Work The more models and deal analyses you have, the better you'll perform... and the higher your bonus will be

I won’t mix words: Most Project Finance training is terrible .

Whether you’re looking at paid courses, in-person training, or free resources, most training uses two equally useless approaches: 

Wrong Approach #1: Convoluted Models – Complex models can be nice, but when you’re  completing case studies in an interview setting , no one will ask you for a 5,000-row Excel model with built-in VBA and macros. And when you’re on the job, shorter, simpler models are more useful if you need a quick reference or formulas you can re-purpose for your current task.

Wrong Approach #2: “Barely Project Finance” Financial Modeling – On the other end of the spectrum, some of this training is so simple and generic that it’s a stretch to call it “Project Finance.” You can project the cash flows for  almost any asset , but you need a lot more than simple cash flows linked to energy production to call it a “Project Finance model.”

The correct approach – the one our course uses – is  based on real-life case studies given in interviews .

We don’t teach 5,000-row Excel models that require 30 hours to understand; we teach what you need to know to complete case studies.

That means the models in this course are in the “intermediate zone,” with each one taking up 50 to 300 rows in Excel (the “on the job” case studies go beyond this since they are intentionally more complex).

It’s enough to learn the core concepts and finish in a few hours, but not so much that you get lost in a pile of minutiae under some broken wind turbines.

We created this course by gathering dozens of case study examples from students who had been through interviews at Infrastructure Private Equity firms and Project Finance groups and synthesizing the best parts of their cases.

Our approach focuses on the  3 most important points in Project Finance Modeling:

1) Cash Flow Projections – You need to know how to move from  energy production or traffic levels to  revenue and expenses and how items such as depreciation, loan fees, and interest factor into an asset’s cash flows.

If you get your units wrong, your offshore wind farm might morph into a nuclear plant and have a meltdown or two – and you won’t be able to blame it on Homer Simpson!

2) Debt Sizing and Sculpting – Project Finance is fundamentally different from corporate finance because of this focus on  sculpting the Debt to match the asset’s future cash flows. And you must know how to set up debt sizing and sculpting with standard Excel formulas, Goal Seek, simple VBA code, and circular reference switches.

3) Investment Recommendations – Finally, you need to understand  how to put together all the pieces to make an investment recommendation. You must be able to read the numbers in the different cases, assess the risk factors, and say “Yes” or “No” to a deal.

No other training on the market  puts together all the pieces quite like this because they’re too busy teaching confusing models that require a Ph.D. to understand.

This course has 8  case studies ranging from 30 minutes to 4 hours, so you can pick your ideal learning path based on how much time you have.

Through these case studies, you’ll learn to:

• Project cash flows for different types of infrastructure assets, ranging from renewables to fossil fuels to nuclear to toll roads and airports.
• Understand timelines and flags in infrastructure models and how they factor into debt refinancing, sculpting, and sizing.
• Build the key drivers for infrastructure assets, including the links between energy production under different contract types and revenue (and, for transportation, the links between GDP, inflation, and growth rates).
• Calculate the key metrics for infrastructure assets for both the equity investors and the lenders, including the equity IRR and cash-on-cash multiple, the Debt Service Coverage Ratio (DSCR), the Loan Life Coverage Ratio (LLCR), the Project Life Coverage Ratio (PLCR), and the Levelized Cost of Energy (LCOE).
• Sculpt and size Debt properly based on minimum DSCR and LLCR targets – with standard Excel formulas, Goal Seek, simple VBA code, or circular calculations.
• Handle multiple tranches of Debt, such as one tranche with a “merchant tail” and fixed amortization or two tranches that are both sculpted and sized based on the asset’s cash flows.
• Build in reserve accounts, such as the Debt Service Reserve Account (DSRA), Major Maintenance Reserve Account (MMRA), and Decommissioning Reserve, and analyze their impact on the cash flows.
• Model construction periods in development deals, including tricks to avoid the circular references created by the interest during construction (IDC) and the loan commitment fees.
• Use VBA to avoid circular references, size and sculpt Debt properly, build sensitivity tables, and back-solve for key assumptions such as the proper PPA rates in different scenarios.
• Make investment recommendations based on the deal’s expected returns and the key risk factors.

If you want to answer interview questions, complete case studies with ease, and leap up the ladder once you start working, this is the course for you.

Brian DeChesare Founder, Breaking Into Wall Street

Here’s What You’ll Get When You Sign Up for This Project Finance & Infrastructure Modeling Course:

Acquisition Case Studies ("Brownfield" Deals)

WHY IT’S IMPORTANT: This training gets you up to speed  quickly with cash flow projections and debt modeling for assets like toll roads and power plants, which are the bread-and-butter of infrastructure.

This training is based on  2 case studies – one for a toll road in Spain and one for a natural gas power plant in the U.S.

You’ll learn how to project revenue, expenses, and cash flow for each one, including nuances around downtime for maintenance and repairs and possible net operating losses (NOLs).

You’ll also learn how to sculpt and size the Debt using simple Goal Seek functions as well as a macro written in VBA – and how to handle an acquisition scenario with two tranches of Debt and a “merchant tail” on one.

Finally, you’ll use the IRR and credit metric output to make an investment recommendation in each case and determine whether the asking prices are appropriate.

Development Case Studies ("Greenfield" Deals)

WHY IT’S IMPORTANT: These lessons walk you through the construction and operations of renewable assets (solar and wind farms) and explain how to evaluate deals and make investment recommendations.

In these lessons, you’ll complete a  solar plant development model and an  offshore wind farm model .

You’ll start by learning how to model the  construction period for renewable assets, including the debt and equity draws, the interest during construction (IDC), the loan commitment fees, and more.

Then, you’ll learn how to refinance the construction loan into permanent loans, and you’ll forecast the revenue and expenses based on the asset’s energy production, degradation, seasonality, and “uncertainty” (e.g., P50 vs. P70 vs. P90).

Each model treats the Debt a bit differently, so you’ll learn how to size and sculpt it to match the asset’s cash flows based on targets such as a minimum DSCR or LLCR – and you’ll learn how to model multiple Debt tranches in a single deal based on these overall constraints.

Finally, you’ll answer case study questions, set up sensitivities, and recommend investing based on the potential returns and risk factors.

Debt Sculpting, Sizing, and VBA (Mini-Course)

WHY IT’S IMPORTANT: This mini-course is perfect if you want to learn  the concepts in Project Finance without completing the detailed case studies. Think of it as your “interview crash course.”

This set of lessons walks you through the fundamental concepts using simplified models: The Debt Service Coverage Ratio (DSCR), the Loan Life Coverage Ratio (LLCR), and how to size and sculpt Debt based on both of them, including VBA and Goal Seek to remove circular references.

The training also covers cash flow sweeps, Debt sizing/sculpting with variable dates and maturities, quarterly models, and how to size and sculpt two Debt tranches with different terms.

The final lessons explain the link between the Construction Loan and Permanent Loans in a Project Finance model and how to avoid circular references in the development period using simple VBA code.

Detailed Quarterly Solar Development Case Study

WHY IT’S IMPORTANT: These lessons walk you through a more complex “on the job” case study for a solar plant development in Australia, with a full quarterly model and support for reserve accounts.

In these lessons, you’ll complete a  quarterly model for a real solar plant in Queensland, Australia, and make an investment recommendation for the equity investors and the lenders.

You’ll start by setting up the  upfront and pro-rata equity and debt draws to cover the construction costs, and you’ll forecast the revenue and operating expenses based on annual vs. quarterly payments and production incentive payments.

Then, you’ll sculpt and size the Senior Debt based on a minimum targeted LLCR in each operating case, with full support for downside scenarios such as availability reductions, construction contingencies, and operating expense overruns.

You’ll also learn how the  reserve accounts , such as the Debt Service Reserve Account (DSRA), Major Maintenance Reserve Account (MMRA), and Decommissioning Reserve, work in an infrastructure model, and how they affect the cash flow to equity and dividends (including a “Cash Trap” setup based on a minimum DSCR and Funded Reserves).

The final lessons walk you through the Levelized Cost of Energy (LCOE) calculation, sensitivity tables, and a full investment recommendation in both Word and PowerPoint format.

Airport Acquisition and Expansion Case Study

WHY IT’S IMPORTANT: These lessons walk you through an “on the job” case study for the acquisition and expansion of the Singapore Changi International Airport, including support for a full 3-statement model.

In this case study, you’ll build a  full 3-statement buyout model for the Singapore International Airport and evaluate the initial deal and its S$10 billion Terminal 5 construction project.

This model blends elements of traditional leveraged buyout models, such as scheduled debt repayments and cash flow sweeps, with infrastructure-specific features, such as Construction Loans and Equity Draws, DSCR-constrained Dividends, and growth rates that depend directly on GDP and inflation numbers.

It also includes some more advanced debt features, such as “grace periods” and variable repayment schedules that change based on the year number.

The final lessons walk you through the IRR and cash-on-cash multiple calculations and how to evaluate the credit risk to the lenders in the deal; you’ll also get the full case answers and a presentation with our recommended changes to the deal.

Nuclear Plant Development Case Study

WHY IT’S IMPORTANT: This training delves into the nuances around assets with extremely long construction timelines and operating lives and explains how the financing methods and investment analysis differ.

You’ll build a detailed development and operational model based on the Shin Hanul nuclear power plant in South Korea in this module (estimated construction cost of nearly $9 billion USD), and you’ll use this model to recommend the electricity rates used in the power purchase agreement (PPA).

This model includes additional complexities around the development process, such as multiple phases and Preferred Stock that is not refinanced; the operational period also includes a cash flow sweep, DSCR-limited Dividends, and a reserve account for multi-year decommissioning.

It also includes support for a cash flow sweep, interest income from the reserve accounts, and hybrid financing that behaves more like debt or equity, depending on the period.

The final lessons walk you through the returns calculations, the Levelized Cost of Energy (LCOE), and the VBA code to automate the process of back-solving for the recommended PPA rates. Finally, you’ll get the case study answers and a full investment recommendation presentation.

Lithium Mining Development Case Study

WHY IT’S IMPORTANT: This training gives you a crash course on models for natural-resource assets and goes into far more depth on how to use VBA and macros to drive models.

You’ll build a  detailed development and operational model for the Thacker Pass project in Nevada in this module (estimated $5 billion USD construction cost), and you’ll use this model to recommend for or against investing in the deal.

The case study goes into mining-specific nuances around the revenue, expenses, and cash flow, including offtake vs. spot prices, mineral grades, strip ratios, price hedging, and accelerated depreciation.

It also features the most advanced Debt Schedule in the entire course, with sizing and sculpting driven by a set of VBA macros and support for features like the DSRA, Cash Trap, and Cash Flow Sweep.

The final lessons walk you through the returns calculations and how to create sensitivity tables using custom VBA code that is fully integrated with the other macros. You’ll also get the full case study answers and an investment recommendation presentation, including proposed changes to the deal structure.

Certification Quiz

WHY IT’S IMPORTANT: This end-of-course certification quiz lets you test your knowledge and prove it to employers.

This quiz consists of 25 challenging questions that are based on the case studies in the course.

If you pass the quiz with a 90% score (no restrictions on time or the number of attempts), you’ll gain our Certificate in Project Finance Modeling, which you can add to your LinkedIn profile and present in interviews.

Plus… This Course Comes With The Following Valuable Tools To Accelerate Your Learning:

…and Our Legendary, 90-Day No-Questions-Asked Money-Back Guarantee

Take a full 90 days to review the Project Finance & Infrastructure Modeling course and make certain it’s everything we promise.

You do not have to finish everything in that time – think of it as your “trial period” or “evaluation time.”

If you aren’t satisfied for any reason, simply ask for your money back, and we’ll issue a prompt refund – no questions asked.

Plus Expert Support from Experienced Finance Professionals

Just moments after you enroll, you’ll gain Instant Access to the  Project Finance & Infrastructure Modeling course.

But that’s not the best part.

The best part is expert support for a full 5 years after purchase!

If there’s anything that you don’t understand, just go to the “Question/Comment” area below each lesson and ask your question there.

These comments are monitored and responded to by our expert support team – every one of whom has personal experience working on deals at finance firms.

That ensures that you’ll get responses from people with deep experience in the field – not a clueless high school temp clutching the “Help Desk” manual.

This personalized, expert support is one of the things that sets Breaking Into Wall Street apart and gets you to your goals faster.

You can often learn just as much from reading other students’ questions and our responses as you will from the lessons themselves!

Our 1-on-1 coaching rate is $200+ per hour. But when you invest in the Project Finance & Infrastructure Modeling course, personal support is included for FREE .

NOTE: There are some limitations to these support services. For example, we cannot complete models, case studies, or homework assignments for you.

We also cannot provide play-by-play support with an earpiece during interviews.

Finally, we cannot answer questions about topics not covered in these courses, such as sales & trading interview questions.

We’re happy to answer career-related, qualitative, and technical questions that are related to the course materials.

What’s Your Investment In This Project Finance & Infrastructure Modeling Course?

To put this in context, let’s look at your Return on Investment in this course…

The pay for Project Finance jobs varies, but it’s safe to say that even entry-level Associates will earn  at least $150,000 USD per year, if not more than that at larger firms and groups – and the pay is even higher at infrastructure private equity firms.

And as you progress, your total compensation gets higher and higher; Principals can earn into the mid-six-figure range, and Partners in infrastructure private equity can earn $750K to $1 million+ annually, depending on the fund size and overall performance.

And each one had to start in an entry-level role to get their foot in the door – just like you today.

We  could sell the 8 core components of this course for $97 each, for a total of $776, but since this course is new, we’re offering an “early-bird deal” and discounting it to  just $247 .

Compared with your potential upside – jobs that pay well into the six-figure range – your investment in the course is nominal.

By investing just $247 in this course, you’re greatly improving your chances of landing a job that pays upwards of $150,000 in Year 1 – that’s more than a 600x return on investment!

Even if this training only helps you win an internship , that’s still at least $10,000 USD at any reputable firm, for a 40x ROI.

There is no other way to get this level of training… this level of on-demand support… this level of testing and case study practice… and this level of access to a community of thousands of peers…

…at ANY price!

So yes, you have to invest in yourself to gain access to this specialized infrastructure modeling training, but it will be one of the smartest, highest-return investments you ever make – we guarantee it!

We’ve bent over backward to deliver the best, most comprehensive program on the market that gives you everything you need to land a great job and start a long-term career in infrastructure investing.

To date, over 56,763+ people have invested in BIWS training and gone on to secure lucrative jobs in the industry. I want you to be next, and I want to make this a “no-brainer” decision for you.

click here to get project finance & infrastructure modeling Just 1 Payment of $247 (100% Unconditional Money-Back Guarantee)

You’re Also 100% Protected By Our Unique 90-Day, No-Questions-Asked, Money-Back Guarantee

Since I want to make this a “no-brainer” decision for you, the Project Finance & Infrastructure Modeling course comes with the same iron-clad guarantee that we offer on everything:

You have 90 days to evaluate the course material and see if it’s right for you.

If you decide at any point during those 90 days that the Project Finance & Infrastructure Modeling  course doesn’t meet your expectations, simply request a refund.

We perform for you, or you get your money back – that’s how it always should be.

Here’s What Will Happen Within a Few Short Moments of You Joining the Project Finance & Infrastructure Modeling Course:

The minute you join, you’ll have access to the complete  Project Finance & Infrastructure Modeling course, including 169 separate videos, full written notes, transcripts and captions, “Before and After” Excel files for each lesson, and 8 case studies based on different energy, transportation, and mining assets.

And the best part: We’ll be here to guide you every step of the way because your enrollment comes with a full 5 years of expert support. If there’s something you don’t understand, just go to the “Question/Comment” area below each lesson and ask your question, and we’ll respond with a detailed answer.

On top of that, you’ll also get access to free updates over time as we continue to improve the course.

Decision and Action Time

Of course, there are other options for learning this material.

For example, you could complete a course on this topic from another provider, buy a generic course on a random e-learning site for $10 or $20… or download some long and convoluted Project Finance models from another site.

These methods have their merits, but they won’t get you the same  results as this course because they’re designed for “generalist” audiences – not people currently interviewing for investment roles at infrastructure firms or project finance roles at banks.

So, if you want to master cash flow projections, debt sizing and sculpting, and returns analysis  as they are used in these industries and hit the ground running on Day 1 of your internship or full-time job, this training is your best option.

Yes, it is more of an investment than a book or an online course written by monkeys at the keyboard, but ask yourself about the value of your time and interview opportunities.

If you win a coveted interview spot at a top infrastructure investment firm, such as Brookfield, Global Infrastructure Partners, or Stonepeak, do you want to “wing it?”

Or do you want to ensure that you’ve prepared in the most comprehensive way possible?

If you’re serious about your future career in the finance industry, you should not even have to think about this one.

And if you have any doubts, it’s all backed by our no-questions-asked, no-hassle, 90-Day Money-Back Guarantee.

In fact, the ONLY risk is that you might apply for a job or walk into an interview without this course – and lose out to another candidate who has completed it.

The next move is up to you.

You can  hope that an investment firm or bank hires you without knowledge of these topics or the ability to complete case studies and make investment recommendations…

…or you can confidently tell them you’ve completed  the most targeted infrastructure and project finance training available , based on 8 case studies and authored by finance professionals who have collectively worked on dozens of deals.

I know you’ll make the right choice.

To YOUR success,

Brian DeChesare Breaking Into Wall Street Founder

P.S. Remember that you have NOTHING to lose and nearly unlimited upside – your future career in a high-paying industry – to gain. You have a full 90 days to evaluate the program and return it for a full refund if you’re not satisfied.

Of course, it’s much more likely that you’ll be writing in to thank me in the future – just like so many others have. Here’s what some of our BIWS students have said about their experiences:

"Thanks to the courses I bought on BIWS, I managed to get an offer in Project Finance in a top-ranked European bank."

"The courses have been with me since the beginning of my career. I was a sell-side research analyst, now working at an infrastructure investments company."

"With no background in IB, I won multiple offers in private equity as well as one offer from IB. I am currently working at a PE fund, and your case studies made the case studies in their interviews a cake walk."

"I actually have the access to material of a BIWS competitor - WSP - and your education style is way better in my opinion."

"I was in consulting at MBB and your course helped me land a job in private equity. It's still helping me get better at my job!"

"I have purchased the whole course available on your website, and I believe it has been one of the best investments I have made."

"Overall, the BIWS materials I've purchased have been a great supplement to my learning and efforts in securing a private equity/investment role in a major finance hub."

"The videos are hands-down the best resource for learning the technical aspects of finance because you can watch and do the models, watch the videos on how to articulate the concepts in an interview, then practice as much as you want."

Installment Plans Available (Pay in 4 Monthly Installments)

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About / Centers

Salomon Center for the Study of Financial Institutions | Case Studies

Case Studies

The following case studies on Project and Infrastructure Finance have been written and taught by Stern Faculty:

• Rutas de Lima. Greenfield/brownfield toll highway $900 million debt financing in Lima, Peru (2014-16), sponsored by Norberto Odebrecht Construtora of Brazil; controlling interest later sold to Brookfield. Ingo Walter.
• BlackRock’s Infrastructure Debt Initiative: Addressing the Market Opportunity in Project Finance. (2015) Creating a market for infrastructure debt financing in the global institutional fixed-income market. Paul Tice, Ilya Bhozenkov and Ingo Walter.
• Cheniere. LNG export terminal at Sabine Pass, Louisiana (2016). Paul Tice and Ingo Walter.
• Privatization of Aluminium Bahrain. IPO of aluminum plant by the government of Bahrain (2013). Ilya Bozhenkov and Ingo Walter.
• Retrospective – Eurotunnel: Background, Debt, Equity. Retrospective case (1986) looking back some 30 years on the financing and outcome of the world’s largest transport infrastructure project. Roy C. Smith and Ingo Walter 
• Dakota Access Pipeline Project (DAPL) – Development, construction and operation of the Dakota Access Pipeline Project, focusing on the underlying economics and financing structure as well as the permitting and regulatory process. Central to the case is management of conflicts with various stakeholders, which is characteristic of many large infrastructure ventures and requires sensitive and pro-active application of cost-benefit assessment in a highly politicized context. (2017) Sinziana Dorobantu and Ingo Walter.

Teaching cases are distributed through Insead and its connection to the Harvard Business School Case Series and the International Case Clearing house (ICCH) in Brussels.

Contact Information

Professor Ingo Walter KMC 9-73, (212) 998-0707 [email protected]

• Search Search Please fill out this field.

What Is Project Finance?

• How It Works

Off-Balance Sheet Projects

Nonrecourse project financing.

• Recourse vs. Nonrecourse Loans

Project Finance vs. Corporate Finance

The bottom line.

• Corporate Finance
• Corporate Debt

Project Finance: Definition, How It Works, and Types of Loans

Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and behavioral finance. Adam received his master's in economics from The New School for Social Research and his Ph.D. from the University of Wisconsin-Madison in sociology. He is a CFA charterholder as well as holding FINRA Series 7, 55 & 63 licenses. He currently researches and teaches economic sociology and the social studies of finance at the Hebrew University in Jerusalem.

Diane Costagliola is a researcher, librarian, instructor, and writer who has published articles on personal finance, home buying, and foreclosure.

Project finance is the funding of long-term infrastructure, industrial projects, and public services using a nonrecourse or limited-recourse financial structure . The debt and equity used to finance the project are paid back from the cash flow generated by the project.

Project financing is a loan structure that relies primarily on the project’s cash flow for repayment, with the project’s assets, rights, and interests held as secondary collateral. Project finance is especially attractive to the private sector because companies can fund major projects off-balance sheet (OBS) .

Key Takeaways

• Project finance involves the public funding of infrastructure and other long-term, capital-intensive projects.
• Project financing often utilizes a nonrecourse or limited-recourse financial structure.
• A debtor with a nonrecourse loan cannot be pursued for any additional payment beyond the seizure of the asset.
• Project debt is typically held in a sufficient minority subsidiary that is not consolidated on the balance sheet of the respective shareholders, which makes it an off-balance sheet item.

How Project Finance Works

As noted above, the term “project finance” refers to the financing of long-term industrial and/or infrastructure projects—most commonly for oil and gas companies and the power sector. It is also used to finance certain economic bodies like special purpose vehicles (SPVs) . The funding required for these projects is based entirely on the projected cash flows.

Some of the common sponsors of project finance include the following entities:

• Contractor sponsors : These sponsors provide subordinated or unsecured debt and/or equity. They are key to the establishment and operation of business units.
• Financial sponsors : These sponsors include investors and are usually in the pursuit of a big return on their investment.
• Industrial sponsors : These sponsors generally believe that the project is related to their own businesses.
• Public sponsors : These sponsors include governments from various levels.

The project finance structure for a build, operate, and transfer (BOT) project includes multiple key elements. Project finance for BOT projects generally includes an SPV. The company’s sole activity is carrying out the project by subcontracting most aspects through construction and operations contracts. Because there is no revenue stream during the construction phase of new-build projects, debt service only occurs during the operations phase.

For this reason, parties take significant risks during the construction phase. The sole revenue stream during this phase is generally under an offtake agreement or power purchase agreement. Because there is limited or no recourse to the project’s sponsors, company shareholders are typically liable up to the extent of their shareholdings. The project remains off-balance sheet for the sponsors and for the government.

Not all infrastructure investments are funded with project finance. Many companies issue traditional debt or equity in order to undertake such projects.

Project debt is typically held in a sufficient minority subsidiary and is not consolidated on the balance sheet of the respective shareholders. This reduces the project’s impact on the cost of the shareholders’ existing debt and debt capacity. The shareholders are free to use their debt capacity for other investments.

To some extent, the government may use project financing to keep project debt and liabilities off-balance sheet so they take up less fiscal space. Fiscal space is the amount of money that the government may spend beyond what it is already investing in public services such as health, welfare, and education. The theory is that strong economic growth will bring the government more money through extra tax revenue from more people working and paying more taxes, allowing the government to increase spending on public services.

When a company defaults on a loan, recourse financing gives lenders full claim to shareholders’ assets or cash flow. In contrast, project financing designates the project company as a limited liability SPV. The lenders’ recourse is thus limited primarily or entirely to the project’s assets, including completion and performance guarantees and bonds, in case the project company defaults.

A key issue in nonrecourse financing is whether circumstances may arise in which the lenders have recourse to some or all of the shareholders’ assets. A deliberate breach on the part of the shareholders may give the lender recourse to assets.

Applicable law may restrict the extent to which shareholder liability may be limited. For example, liability for personal injury or death is typically not subject to elimination. Nonrecourse debt is characterized by high  capital expenditures (CapEx) , long loan periods, and uncertain revenue streams. Underwriting these loans requires financial modeling skills and sound knowledge of the underlying technical domain.

To preempt deficiency balances, loan-to-value (LTV) ratios are usually limited to 60% in nonrecourse loans . Lenders impose higher credit standards on borrowers to minimize the chance of default. Nonrecourse loans, on account of their greater risk, carry higher interest rates than recourse loans.

Recourse Loans vs. Nonrecourse Loans

If two people are looking to purchase large assets, such as a home, and one receives a recourse loan and the other a nonrecourse loan, the actions that the financial institution can take against each borrower are different.

In both cases, the homes may be used as collateral , meaning they can be seized should either borrower default. To recoup costs when the borrowers default, the financial institutions can attempt to sell the homes and use the sale price to pay down the associated debt. If the properties sell for less than the amount owed, the financial institution can pursue only the debtor with the recourse loan. The debtor with the nonrecourse loan cannot be pursued for any additional payment beyond the seizure of the asset.

Project and corporate finance are very important concepts in the world of financing. Both of these funding methods rely on debt and equity to help businesses reach their financing goals. Having said that, they are very distinct.

Project finance can be very capital-intensive and risky and relies on the project’s cash flow for repayment in the future. Corporate finance, on the other hand, is focused on boosting shareholder value through various strategies like the investment of capital and taxation. Unlike project financing, shareholders receive an ownership stake in the company with corporate financing.

Some of the key features of corporate financing include:

• A company’s capital structure, which is a company’s funding of its operations and growth.
• The distribution of dividends . Dividends represent a portion of the profits generated by a company and are paid to shareholders.
• The management of working capital , which is money used to fund a company’s day-to-day operations.

What Is the Role of Project Finance?

Project finance is a way for companies to raise money to realize opportunities for growth. This type of funding is generally meant for large, long-term projects. It relies on the project’s cash flows to repay sponsors or investors.

What Are the Risks Associated With Project Finance?

Some of the risks associated with project finance include volume, financial, and operational risk. Volume risk can be attributed to supply or consumption changes, competition, or changes in output prices. Inflation, foreign exchange, and interest rates often lead to financial risk. Operational risk is often defined by a company’s operating performance, the cost of raw materials, and the cost of maintenance, among others.

Why Do Firms Use Project Finance?

Project finance is a way for companies to fund long-term projects. This form of financing uses a nonrecourse or limited-recourse financial structure . Firms with weak balance sheets are more apt to use project finance to meet their funding needs rather than trying to raise capital on their own. This is especially true for smaller companies and startups that have large-scale projects on the horizon.

Companies need capital in order to begin and grow their operations. One of the ways that certain companies can do so is through project financing. This form of funding allows businesses that may not have a strong financial history to raise capital for larger, long-term projects. Sponsors, which invest in these projects, are paid using cash flows from the project. This is unlike corporate finance, which is less risky and concentrates on maximizing shareholder value.

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Project Finance for Construction and Infrastructure: Principles and Case Studies 1st Edition

This is a self-contained text on the logic and institutions of project finance, supplemented by a series of project finance case studies illustrating applications in different economic environments, across different jurisdictions and at different stages of development.

It will introduce an analytical framework drawing on applied institutional economics that includes and concentrates primarily on an analysis of the institutional logic behind generic project finance arrangements.

The application of the institutional framework will be demonstrated with project cases from Hong Kong, Thailand, India, Europe and Azerbaijan – each at different stages of development. While each project case will have a general theme and will highlight aspects of interest to built environment professionals, it will primarily be used to illustrate one or more specific PF/PFI principle.

• ISBN-10 1405151277
• ISBN-13 978-1405151276
• Edition 1st
• Publisher Wiley-Blackwell
• Publication date January 14, 2008
• Language English
• Dimensions 7.8 x 1 x 10 inches
• Print length 370 pages
• See all details

Editorial Reviews

"An interesting publication with many key aims, it looks to supply the concepts of project finance to academics and students by the utilisation of real projects." ( Building Engineer )

From the Inside Flap

From the back cover, about the author.

Frederik Pretorius and Berry Hsu, Department of Real Estate and Construction, University of Hong Kong.

Paul Lejot and Douglas Arner, Faculty of Law, University of Hong Kong.

Arthur McInnis, Faculty of Law, City University of Hong Kong.

Product details

• Publisher ‏ : ‎ Wiley-Blackwell; 1st edition (January 14, 2008)
• Language ‏ : ‎ English
• Hardcover ‏ : ‎ 370 pages
• ISBN-10 ‏ : ‎ 1405151277
• ISBN-13 ‏ : ‎ 978-1405151276
• Item Weight ‏ : ‎ 2.4 pounds
• Dimensions ‏ : ‎ 7.8 x 1 x 10 inches
• #555 in Business Project Management (Books)
• #959 in Home Design & Construction (Books)
• #1,230 in Construction Engineering (Books)

About the author

Frederik pretorius.

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Easing complex transactions: project finance case studies, project finance is complex, which is a why a corporate trust partner with comprehensive capabilities is a critical piece of the puzzle..

Improving the country’s aging infrastructure is a top priority, and the $1 trillion Congress recently committed to infrastructure spending will likely kickstart a host of new building projects. At the same time, the American Society of Civil Engineers estimates that the United States needs to spend $4.5 trillion by 2025 to “fix” the country’s infrastructure.

What that means for stakeholders across the infrastructure industry is a growing pipeline of projects, along with the need for project finance expertise to help move projects forward. Bringing those projects to a successful close requires proven expertise, experience and strong communication processes, as well as an ability to work seamlessly with a number of parties and an ability to understand and navigate project finance risks.

As a leading global corporate trust provider , U.S. Bank has experience working on many complex transactions.

“We’ve seen many different approaches to these financings, and we have the ability to come to the table, apply our expertise from prior transactions in the documentation process, and help our clients reach the best outcome on how they’re going to put these complex financing packages together,” says Bob Kocher, managing director, U.S. Bank Global Corporate Trust.

That expertise was recently highlighted in two major project finance projects, where U.S. Bank served as a trustee in bond issuances in the capital stack of the Red River Diversion Project at the Minnesota/North Dakota border and the Central 70 Project in Colorado.

Red River Diversion project

In an infrastructure industry that is no stranger to large, complex projects, the Red River Diversion Project is a notable standout. The $3 billion project is more than a decade in the making, with numerous stakeholders and a mix of funding sources. It’s also a landmark public-private partnership (P3) project in the water infrastructure industry.  

The Red River Diversion project represents the first use of the U.S. Army Corps of Engineers’ P3 Pilot Program to reach financial close. The aim of the program is to improve collaboration between the public and private sectors, as well as develop a more efficient alternative financing model for future Corps infrastructure projects.  

The Red River Diversion project intends to provide permanent, reliable flood protection to the Fargo-Moorhead metropolitan area. The Red River serves as the state border for much of Minnesota and North Dakota and cuts through the center of Moorhead, Minnesota, and Fargo, North Dakota. Spring flooding in the Fargo-Moorhead metro has been a chronic problem for decades.  

The solution is the development of a 30-mile diversion channel. The Army Corps of Engineers is overseeing design and construction, with completion scheduled in 2027.  

The Red River Diversion project involved a number of intricate financing sources that were woven together, including developer equity, federal and state funding and $1.1 billion from local tax levies. The Metro Flood Diversion Authority worked with the U.S. Environmental Protection Agency to obtain one of the largest Water Infrastructure Finance Innovation Act (WIFIA) loans in the program’s history, at $569 million. In addition, project financing included $273 million in tax-exempt senior bonds issued through the Wisconsin-based Public Finance Authority.  

According to the Corps , the Red River Diversion P3 was an “innovative approach leading to significant gains in efficiency, productivity and resiliency” that saved the federal government $277 million and shortened the construction time by 10 years.  

As part of a competitive bid process, U.S. Bank was selected in April 2021 to serve as the bond trustee on the bonds issued by the Wisconsin Public Finance Authority, as well as filling additional roles as the account bank, collateral agent and dissemination agent.  

Once U.S. Bank was selected as trustee, it needed to get up to speed quickly with all documents, provide comments regarding duties and liability and communicate to all parties its views on how the transaction should work as it related to the daily activities of the trustee.  

“This trustee deal had a tremendous amount of document turnarounds as a result of the complexity of the transaction. It required attention to detail to ensure changes were consistent throughout all the documents,” says Angela Davis, relationship manager, Global Corporate Trust at U.S. Bank.  

Keeping communication and workflow on track is a testament to the U.S. Bank team’s diligence in tracking documents, as well as its proactive approach to the collection and distribution of project information and covenants.  

“Through our hands-on partnership and ability to work efficiently with other business lines inside of U.S. Bank, our client received everything they needed to keep this project moving forward,” says Davis.  

Collectively, the U.S. Bank team will serve as the operational and administrative end of the financing, following the documents, administering the movement of funds and making sure the money is moved from account to account properly. U.S. Bank will be responsible for the billing and collecting funds to pay holders of the bonds and senior notes through 2056.  

“P3 projects are the wave of the future, and U.S. Bank is at the forefront of that shift in how infrastructure projects are financed,” says Kocher.

“We can come to the table, apply our expertise from prior transactions in the documentation process, and help our clients reach the best outcome.” Bob Kocher, managing director, U.S. Bank

Central 70 project

Interstate 70, between I-25 and Chambers Road in Denver, is a key corridor that services nearly 1,200 businesses and provides an important regional connection to Denver International Airport. The  Central 70 Project  will reconstruct a 10-mile stretch of I-70, add one new Express Lane in each direction, remove the aging viaduct and create a four-acre park over a portion of the lowered interstate between Brighton and Colorado Boulevards.  

The Central 70 Project involves the refinancing of a 2017 Transportation Infrastructure Finance and Innovation Act (TIFIA) loan, along with the financing of additional costs. As part of the refinancing, the U.S. Department of Transportation’s (DOT) Build America Bureau provided a new TIFIA direct loan with a reduced interest rate, allowing for additional loan principal increase to facilitate project completion.  

Besides TlFIA, the project is backed by the proceeds of tax-exempt private activity bond and taxable bond issuances, as well as contributions from the state DOT, the Colorado Bridge and Tunnel Enterprise, the High Performance Transportation Enterprise, and local and state entities .  The Series A bond issuance totaled $51,670,000 and the Series B bond issuance totaled $464,955,000.  

U.S. Bank served as bond trustee and acted in ancillary roles as the collateral agent and intercreditor agent, paying agent, registrar, transfer agent and dissemination agent. In addition, because bondholder approval was needed to issue the new debt in 2021, U.S. Bank stepped in and served as the tabulation agent for the existing investors.  

Key to a successful project finance deal is finding a partner with the expertise, resources and systems to streamline the process, such as tracking necessary compliance requirements and providing online reporting for the client. In addition, these complex deals often require a higher level of client relationship management.  

“There is a lot more client interaction than a typical municipal financing, because there is always something going on, whether it is requisitions being paid or the sponsor needing to post financials or updates that need to be disseminated to the market,” says Gretchen Middents, relationship manager, Global Corporate Trust at U.S. Bank. “So, it is a much more hands-on relationship as compared with other assignments that don’t have the same scope of documents and requirements.”  

In addition, working with a third-party trustee and agent to perform all project finance roles can produce numerous efficiencies, such as streamlining operations, coordinating workstreams from various parties and providing assistance for investors at every stage of the project lifecycle. Finding a partner with extensive experience servicing all debt vehicles can help guide decision-making with strategic insights and proactive solutions.  

“These projects are more of a team effort because of the complexity,” adds Middents, “and being able to rely on others within our organization is key to our success.”

U.S. Bank administers a variety of infrastructure asset types and has the dedicated expertise to assist investors at every stage of the project finance lifecycle. See our extensive suite of services for debt financing  here  or contact Lars Anderson at  [email protected]  or Alejandro Hoyos at  [email protected] .

Learn about U.S. Bank

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Loan approval is subject to credit approval and program guidelines. Not all loan programs are available in all states for all loan amounts. Interest rate and program terms are subject to change without notice. Mortgage, Home Equity and Credit products are offered through U.S. Bank National Association. Deposit products are offered through U.S. Bank National Association. Member FDIC.

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Please note you do not have access to teaching notes, infrastructure project finance: a systematic literature review and directions for future research.

Qualitative Research in Financial Markets

ISSN : 1755-4179

Article publication date: 8 February 2021

Issue publication date: 22 June 2021

The objective of this systematic literature review (SLR) is to outline the existing research in the field of infrastructure project finance (IPF). This paper aims to summarise the academic and practitioner research to highlight the benefits of adopting IPF structures in uncertain environments. By highlighting all conceptual and applied implications of IPF, the study identifies future research directions to develop a holistic understanding of IPF.

Design/methodology/approach

The SLR is based on 125 articles published in peer-reviewed journals during 1975–2019. After providing a brief overview of IPF, research methodology and citation, publication and author analysis, the SLR presents the various domains around which existing research in IPF is focussed and provides future research propositions in each domain.

The study found that despite the increased usage of IPF, academic and practitioner research in the field is lagging. Also, with increased usage of IPF in emerging and under-developed economies, IPF structure presents a perfect setting to understand how investment and financing are interlinked and how to overcome the institutional voids, socio-economic risks and inter-partner differences by IPF structures.

Originality/value

This literature review paper is based on the research in IPF between 1975 and 2019. To the best of the authors’ understanding, the SLR is the first focussed study detailing a methodical and thorough compendium of existing studies in the IPF domain. By focussing on various domains of IPF research, this paper presents future research avenues in the field.

• Infrastructure project finance
• Risk management
• Agency conflict
• Contractual structure
• Debt participants

Kumar, A. , Srivastava, V. and Tabash, M.I. (2021), "Infrastructure project finance: a systematic literature review and directions for future research", Qualitative Research in Financial Markets , Vol. 13 No. 3, pp. 295-327. https://doi.org/10.1108/QRFM-07-2020-0130

Emerald Publishing Limited

Copyright © 2021, Emerald Publishing Limited

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Book description

Tackle infrastructure development projects in emerging markets with confidence

In Project Finance: Applications and Insights to Emerging Markets Infrastructure , distinguished professor and author Paul Clifford insightfully applies the fundamental principles of project finance structuring to infrastructure investments in emerging markets.

Using leading emerging market case studies to illuminate the underlying themes of the book, the author provides a practitioner’s perspective and incisive analysis of concepts crucial to a complete understanding of project finance in emerging markets, including:

· Risk management

· ESG and impact investing

· The emergence of new global multilateral development banks

· China’s Belt and Road Initiative

Project Finance bridges the gap between theoretical infrastructure development, investment, and finance and the implementation of that theory with instructive and applicable case studies. Throughout, the author relies on a grounded and quantitative approach, combining the principles of corporate finance with straightforward explanations of underlying technologies, frameworks, and national policies.

This book is an invaluable resource for undergraduate and graduate students in finance, as well as professionals who are expected to deal with project and infrastructure finance in emerging markets.

Table of contents

• Acknowledgments
• ORIGINS AND HISTORY OF PROJECT FINANCE
• WHY SPONSORS USE PROJECT FINANCE
• PROJECT FINANCE—ASSET CLASS PERFORMANCE
• GLOBAL INFRASTRUCTURE OUTLOOK
• THE INFRASTRUCTURE GAP IN EMERGING MARKETS
• FOCUS—ASIA INFRASTRUCTURE NEEDS
• COMMERCIAL VERSUS CONTRACT VIABILITY
• SPONSOR RISK
• POLITICAL RISK
• CONSTRUCTION AND COMPLETION RISK
• OPERATION AND MAINTENANCE RISK
• SUPPLY RISKS
• RESERVE RISK
• SALES/OFFTAKE RISK
• APPROVALS AND PERMITS
• SOCIAL AND ENVIRONMENTAL CONSIDERATIONS
• FINANCIAL RISKS
• FORCE MAJEURE RISK
• CONSTRUCTION CONTRACTS IN PROJECT FINANCE
• OPERATIONS AND MAINTENANCE CONTRACTS IN PROJECT FINANCE
• OFFTAKE CONTRACTS/CONCESSION AGREEMENTS
• SUPPLY CONTRACTS
• PROJECT FINANCE LOAN DOCUMENTATION
• KEY LENDER PROTECTION MECHANISMS AND STRATEGIES FOR NEGOTIATING FINANCE AGREEMENTS
• TRACK RECORD OF PROJECT FINANCE IN EMERGING MARKETS—THE ASIAN IPP EXPERIENCE
• CURRENCY MISMATCH—LESSONS LEARNED FROM THE ASIAN CURRENCY CRISIS
• HOW THE ASIAN CURRENCY CRISIS TRANSFORMED THE APPROACH TO PROJECT FINANCE
• ROLE OF MULTILATERAL, BILATERAL DEVELOPMENT BANKS, AND EXPORT CREDIT AGENCIES
• STAKEHOLDER ALIGNMENT ISSUES
• MITIGATING POLITICAL AND SOVEREIGN RISKS
• MULTILATERAL DEVELOPMENT BANKS (MDBS)
• BILATERAL DEVELOPMENT BANKS (BDBS)
• EXPORT CREDIT AGENCIES (ECAS)
• COMMERCIAL BANKS
• POLITICAL RISK INSURANCE MARKET—BREACH OF CONTRACT AND NON-HONORING OF FINANCIAL GUARANTEES
• PROJECT BONDS
• EQUIPMENT SUPPLIERS AND FINANCING
• INSTITUTIONAL LENDERS (INSURANCE COMPANIES, INFRASTRUCTURE FUNDS, PENSION FUNDS, PRIVATE EQUITY, AND SO FORTH)
• STRATEGIES FOR MULTI-SOURCED FINANCING IN EMERGING MARKETS
• THE BORROWER/SPONSOR OBJECTIVES
• LENDERS' OBJECTIVES
• DEBT SIZING AND SCULPTING
• FINANCIAL STRUCTURING—DEBT SIZING AND LOAN AMORTIZATION
• LENDER RATIOS FOR DEBT CALIBRATION AND STRESS TESTING
• CASH TRAPS AND SWEEPS
• SUSTAINABLE INFRASTRUCTURE PROJECT FINANCE AND INVESTING
• EQUATOR PRINCIPLES
• MULTILATERAL DEVELOPMENT BANKS AND ESG FRAMEWORKS
• IFC IMPACT INVESTING PRINCIPLES
• GREEN BONDS
• SUSTAINABILITY PROJECT FINANCING AND UN SOCIAL DEVELOPMENT GOALS (SDGS)
• UNLOCKING INSTITUTIONAL CAPITAL TO MEET EMERGING MARKET SDGS
• PROJECT BONDS VERSUS PROJECT LOANS
• PROJECT BONDS INVESTOR BASE AND MARKET LIQUIDITY
• LOCAL CURRENCY PROJECT BONDS AND PARTIAL CREDIT GUARANTEES/INSURANCE WRAPS
• BACKGROUND AND SCOPE OF THE BELT AND ROAD INITIATIVE
• CHINA'S FINANCING STRATEGY FOR BRI INFRASTRUCTURE DEVELOPMENT
• EMERGENCE OF NEW MULTILATERAL DEVELOPMENT BANKS—FOCUS ON THE ASIA INFRASTRUCTURE INVESTMENT BANK
• MINI-PERM FINANCING STRUCTURES
• BACK-LEVERED FINANCINGS FOR RENEWABLE ENERGY PROJECTS
• INFRASTRUCTURE GUARANTEE PRODUCTS—BOND AND PRIVATE CAPITAL CREDIT ENHANCEMENT
• Bibliography
• End User License Agreement

Product information

• Title: Project Finance
• Author(s): Paul D. Clifford
• Release date: December 2020
• Publisher(s): Wiley
• ISBN: 9781119642466

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Project Finance: Applications and Insights to Emerging Markets Infrastructure

ISBN: 978-1-119-64246-6

December 2020

Digital Evaluation Copy

Paul D. Clifford

Tackle infrastructure development projects in emerging markets with confidence

In Project Finance: Applications and Insights to Emerging Markets Infrastructure , distinguished professor and author Paul Clifford insightfully applies the fundamental principles of project finance structuring to infrastructure investments in emerging markets.

Using leading emerging market case studies to illuminate the underlying themes of the book, the author provides a practitioner’s perspective and incisive analysis of concepts crucial to a complete understanding of project finance in emerging markets, including:

· Risk management

· ESG and impact investing

· The emergence of new global multilateral development banks

· China’s Belt and Road Initiative

Project Finance bridges the gap between theoretical infrastructure development, investment, and finance and the implementation of that theory with instructive and applicable case studies. Throughout, the author relies on a grounded and quantitative approach, combining the principles of corporate finance with straightforward explanations of underlying technologies, frameworks, and national policies.

This book is an invaluable resource for undergraduate and graduate students in finance, as well as professionals who are expected to deal with project and infrastructure finance in emerging markets.

PAUL D. CLIFFORD is Adjunct Professor at Columbia Business School. He also teaches at The City University of New York. He is a consultant for in-house programs at international banks and private sector energy companies. Formerly, he was Director of Project Finance for Standard Chartered PLC and ANZ Bank.