Project financing, as a separate discipline with its own know-how, successful experience, specialist literature and professionals working in this business, has appeared in the financial sphere relatively recently, less than 25 years ago. The reason is obvious - the growing needs of industry could not be satisfied by standard banking transactions of the type "loan to the borrower against 200% of the borrower's marketable collateral".
Project financing is built on a principally different approach - partnership and risk sharing among participants. In this approach:
the project initiator (sometimes called sponsor) must secure some risks of the project with his own funds (various types of cash or capital investment in the project) - usually up to 30%;
the debt financing arranger provides the remaining amount of the required financing (bank loan, placement of securities, issue of bonds or some other suitable method).
Financing private-public partnership projects.
SOLEV is one of the pioneers of using the most advanced project financing schemes of concession and quasi-concession transactions in Russia (as well as Kazakhstan and Ukraine) for major projects in power generation, transport infrastructure, the housing and utility sphere, in urban development projects, etc., when a group of private investors and lenders has the government (national and/or regional and/or local authorities) as a partner. Such transactions are called private-public partnership (PPP) and are viewed with extreme interest by project financing specialists all over the world: on the one hand, PPP radically reduces non-fulfillment and default risks for the private sector, and, on the other, the private capital’s flexibility and mobility greatly improve the controllability of the project, thus raising the efficiency of budget funds.
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