Project finance involves providing equity and debt funding for long-term initiatives based on expected revenues. Project finance managers work with stakeholders to determine appropriate financing structures, such as equity partnerships and non-recourse loans, to secure funding with attractive terms. They coordinate with various parties, including building owners and consultants, to obtain a reasonable expectation of future revenues.
Project finance includes extending equity and debt to a corporate project. Funding is provided according to the revenues that a long-term initiative is likely to produce. Managers of these projects are largely responsible for financial provisions, including working and providing beneficial funding for an undertaking. To do this, the project finance manager must remain in communication with the various stakeholders on a project. They may include other managers and consultants, as well as financiers, contractors and construction workers who help to clearly understand the company’s short-term and long-term financial needs and revenue potential.
While the tasks of a project finance manager can vary depending on the nature of the project, there are some common types of financing structures applied in this market. A project finance manager’s job is likely to involve determining the most appropriate type and then collaborating with finance professionals, such as investment banks, in an attempt to secure funding. The different types of financing tools are in the equity and debt capital market.
It is possible for a project finance manager to seek equity investors to form partnerships and support a venture. Non-recourse loans can be another viable type of financing that the manager arranges with vendors. In this type of financing, the equipment or property used in financing the project serves as collateral. In the event that the project does not create cash flow as expected and the developers default on a loan, the lenders will be entitled to these assets. A finance manager ideally works with funders to obtain the most appropriate type of finance for a project with the most attractive terms possible, based in part on the risk of the project.
A project finance manager may be involved with a project that involves upgrading existing infrastructure to a better standard or with a project that is a new development and must be built from the ground up. Depending on the location of the project, a finance manager is likely to need to coordinate with different parties. These participants could be building owners, project developers, and consultants. Linking with these various stakeholders becomes relevant to funding because the capital extended in project funding depends on the future revenues generated by the project. By obtaining a reasonable expectation of the timing and expected flow of new capital, a project finance manager can provide more relevant details to the capital providers.
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