PROJECT FINANCE ACADEMY

DIPLOMA ACCREDITED BY SBS-SWISS BUSINESS SCHOOL

The Project Finance Academy was carefully crafted by IPMO Advisory in collaboration with industry experts to encompass the honing of all the skills needed in originating and analyzing project finance transactions, across a variety of industries.

Attendees will learn about the latest trends in Project Financing while mastering cutting edge techniques and approaches in Analysis, Documentation, Modelling and the ability to apply them in real-life simulation scenarios through the applications sessions.

The core 4 modules included in the curriculum are strategically separated by several weeks to allow participants to follow up with reading and exercises between the component modules.

The 5th module of the Project Finance Academy allows the participants to attend one or more of the three Industry specific applications sessions in Infrastructure Projects, Oil & Gas and Mining or Power Generation Financing.

The Project Finance Academy is accredited by the SBS-Swiss Business School and participants who successfully complete it will obtain a Diploma in Project Finance from SBS-Swiss Business School.

Trainer Richard Capps

Richard has a unique blend of experience in Law, Corporate Banking, Investment Banking, Corporate Financial Management, General Management and Workout. He has gained a worldwide reputation for the quality and depth of his project finance training courses which have been developed and presented over 20 years.

SBS-Logo-White-01

SBS is a management institution based in Zurich, Switzerland dedicated to preparing students for the careers of the global economy. We offer programs, which specialize in International Management, Finance, Marketing and other fields. We teach state-of-the-art theory, immerse students in international experiences, and connect them to best practice in business. Participants in their programs learn much more than management theory and practice; they acquire new ways of thinking that can profoundly change their lives and the success of their organization.

SBS, is accredited by the British Accreditation Council as an Independent Higher Education Institution. They are double accredited by IACBE, ACBSP, both US wide accreditation bodies recognized by the CHEA.  Furthermore, SBS is also certified by eduQua, the Swiss Quality Assurance certification for Higher Education.

PROGRAM FEATURES

Level

Advanced Training

Program Length

15 Days

Language

English

There are 5 modules in the proposed programme. At the end of each module participants complete a multiple choice test to determine how successfully the content of that module has been absorbed. For those attending the whole programme, they sit an exam consisting of their recommendations for a case – the analysis, the financing structure, the term sheet, and some simple modelling – which tests all facets of the programme .

  • Module #1 – General Principles
  • Module #2 – Analysis & Financing
  • Module #3 – Documentation
  • Module #4 – Modelling
  • Module #5 – Electives

The initial module is to explain the principal ingredients of limited recourse financing – the structure of the SPV, the roles of contract, the financial model and security; the reasons for undertaking the project on a limited recourse basis; an overview of all of the parties typically involved. An explanation of how the structures differ between the different sectors to which project finance is applied.

The Project Finance Analysis module details the financing structure, debt sizing, covenants, cash-flow waterfalls, measurement of returns, loan pricing, etc

A total of 4 days for documentation split as to 2 days for the operational contracts and 2 days for finance documentation including guarantees and security structures.

Project Finance Modelling – involving Presentation, Illustration and Practical work.

Participants attend either all 3 days or the one day that is relevant for their specialist work situation. All of the general approach on Analysis, Documentation and Modelling has already been covered, so this finishing course is to specifically adapt it to fit each of the sectors, with cases and problem-solving group work

Project Finance is synonymous with Limited Recourse Financing. Accordingly, skills obtained from attendance of the Academy programme would be of great assistance to anyone who encounters these financing structures in their work:

* Government officials who procure work on government-initiated projects;
* Debt financiers who finance either Sponsors or SPVs associated with limited recourse transactions;
* Executives at companies who initiate or bid for projects as Sponsors to the transaction;
* Lawyers, either in private practice or as in-house legal advisers at financing institutions or Sponsors;
* Consultants who provide advisory services to participants in project financing
* Executives in fund management who seek investment in particular types of project.

We at IPMO Advisory, believe we have designed and are offering the most comprehensive executive education program in Project Finance – across all skills, and all sectors.

However, not only is it as comprehensive as possible, it is delivered not in academic form.

It adopts a very practical approach, illustrated with a large number of case studies that are carefully chosen to illustrate the concepts and the techniques that are covered though out the academy.

Those who successfully complete the PFA will obtain a Diploma in Project Finance issued by the SBS-Swiss Business School, who have accredited the PFA.

For those who encounter project financings in their current work, or who anticipate developing their career in this area in the years to come, this PFA will be of invaluable benefit in their skills development, and the Diploma qualification a tangible testament of the breadth and depth of their knowledge in this complex and challenging area of finance.

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Dr. RICHARD CAPPS

Richard has a unique blend of experience in Law, Corporate Banking, Investment Banking, Corporate Financial Management, General Management and Workout. He has gained a worldwide reputation for the quality and depth of his project finance training courses which have been developed and presented over 20 years.

  • He trained as a lawyer at Cambridge and the Middle Temple and was called to the English bar.
  • 5 years with an American bank, the world’s largest financier of oil & gas projects, as a corporate relationship manager in New York and London. In the 5 years in this role he was exposed to the development of the North Sea projects and petrochemicals.
  • 6 years: investment banking in Hong Kong and London, primarily involved in mergers and acquisitions and corporate restructurings.
  • 6 years: CFO of a public group with a joint head office in the United States and Australia. In this role he was engaged in over 15 acquisitions, over 20 equity raisings and a large number of complex financings, many of them structured on a limited recourse basis;
  • 18 months: responsible for the ‘workout’ of a company in severe financial difficulties, being appointed as General Manager by KPMG.
  • For the past 20 years Richard has acted as an independent consultant and financial trainer. On the consulting side he has been primarily involved in the financial modelling and structuring of power generation, LNG, mining, and petrochemical projects. On the training side he conducts training courses in Financial Modelling, Loan Documentation, Project Finance and Corporate Finance.
1

29 - 30 SEPTEMBER MODULE 1

2 Day Course

2

27 - 29 October module 2

3 Day Course

3

11 - 14 November module 3

4 Day Course

4

9 - 10 December Module 4

3 Day Course

5

2 - 4 February 2020 module 5

1 – 3 Day Course

Detailed Module Overview

The Project Finance Academy was carefully crafted by IPMO Advisory in collaboration with industry experts to encompass the honing of all the skills needed in originating and analyzing project finance transactions, across a variety of industries.

Attendees will learn about the latest trends in Project Financing while mastering cutting edge techniques and approaches in Analysis, Documentation, Modelling and the ability to apply them in real-life simulation scenarios through the applications sessions.

The core 4 modules included in the curriculum are strategically separated by several weeks to allow participants to follow up with reading and exercises between the component modules.

The 5th module of the Project Finance Academy allows the participants to attend one or more of the three Industry specific applications sessions in Infrastructure Projects, Oil & Gas and Mining or Power Generation Financing.

The Project Finance Academy is accredited by the SBS-Swiss Business School and participants who successfully complete it will obtain a Diploma in Project Finance from SBS-Swiss Business School.

Characteristics of Project Finance

The initial session defines project finance as distinct from other financing approaches, and spells ot the implications of the lack of recourse and the exposure to a single source of cashflow

The Role and Structure of the SPV

The ownership of the project can take a number of different forms.  We look at the various legal structures and the pros and cons from both the Sponsor perspective and from the viewpoint of other parties.

The Role of Contracts

Many projects that fail adopt the view that long term contracts are immune from renegotiation.

We demonstrate that as markets and political environments change, the renegotiation of contractual terms is inevitable, potentially exposing weaknesses in the project’s rationale.

The Role of Asset Protection

Detailed consideration of security structures is covered in module 3.

The purpose here is to contract the role of security in limited recourse financings from the role on conventional corporate lending

The Role of Project Cashflow Model

Module 4 of the Academy is dedicated to Project Finance Modelling.

This section identifies the various ways in which the project cashflow model is critical in determining so many structural aspects of the financing.

Rationale for Project Financing

Project financing is a lot more time-consuming and costly than conventional financing of projects.

There has to be good reason(s) for Sponsors to do it this difficult way, rather than the easy alternatives.

Cross-Border Contract Enforcement

Project financings involve a spider’s web of contracts. These contracts are pointless unless there is an ability to enforce rights under them.

In cross-border context this is often not straightforward. Litigation is not the answer.

When the SPV is very weak (financially) and the counterparty may be a multinational corporation, structures need to be adopted to ensure the SPV is

shielded from duress.

Differences Between Sectors

At the end of the Academy modules, participants may select which electives they wish to attend for sectoral specialization.

The purpose of this session is to identify the ‘moving parts’ of projects in the various sectors and introduce the differences in structure and analysis that are encountered. When the SPV is very weak (financially) and the counterparty may be a multinational corporation, structures need to be adopted to ensure the SPV is shielded from duress.

The Architecture of a Typical Project Financing

Project financings involve a spider’s web of contracts. These contracts are pointless unless there is an ability to enforce rights under them. In cross-border context this is often not straightforward. Litigation is not the answer. When the SPV is very weak (financially) and the counterparty may be a multinational corporation, structures need to be adopted to ensure the SPV is shielded from duress.

This 3 day course represents the heart of the IPMO Academy programme. It articulates in great detail the way in which debt financiers seek to micro-manage the project’s single cashflow, and the manner in which financiers undertake debt-sizing, the evaluation of debt serviceability, the security structures that are adopted, and the financial covenants to trigger both default and cashflow distribution lock-up.
Having identified the analytical approach adopted by debt financiers, the course turns to the analysis undertaken by Sponsors – how evaluation would work if project financing is not adopted, and then what changes in the analytical approach occur when a SPV undertaking limited recourse is interspersed between the Sponsor decision-makers and the underlying project.
We review the different types of financing structure that are adopted for the different sectors, and also the benefits that can be obtained from selecting bond financing (where applicable), export credit agency financing, and the involvement of multilateral agencies.
It is intended that three case studies will be investigated during this course.

The Central Importance of Free Cash Flow

The Free Cash Flow line in a financial model is the most important of all, for a number of different reasons. We summarize each of them.

The Perspective of Debt Financiers

Total dependence on a single cash flow results in structures and covenants that are not found in other financings. The analytical process can be summarized as Identification of Risks; Quantification of Risks; Management of Risks. The session takes in the design of amortisation structure, debt sizing for the different sectors, the financial covenants, the control of cashflows, and the implications of default.

Bond Financing

Many international projects have a US$ Revenue stream, which makes US$ financing under Rule 144A a perfect fit. Project bonds are fundamentally different from corporate Eurobonds, and we review why so. The session also considers the availability of domestic currency bonds in the various markets, and the implications of the rating that a project has.

Export Credit Agencies

ECAs play an important role in many limited recourse financings – especially in the emerging markets. This session gives an understanding of the benefits this approach can deliver and the circumstances where it is optimal.

The Perspective of Sponsors

We look at the implications of undertaking a project without project finance, and then again how the investment analysis works when we introduce a SPV with limited recourse as the financing intermediary. The enhanced IRR that is delivered is then looked at more carefully to determine what its drivers are – particularly from the negotiated clauses in the financing term sheet.

Insurances

Some risks are intended to be transferred to insurers. I some projects the insurance issues can be difficult and complex.

This third module in the Project Finance Academy focuses on the documentation, both operational and financing related.  Project financings are a spider’s web of contracts.  It is the operational contracts that turn the asset infrastructure into a cashflow, and it is that cashflow that allows the initial capital cost of implementing the project to be returned.

We detail the commercial risks that the contracts are intended to manage, the constraints that are encountered in achieving that management of risk, and the various alternative treatments that can be encountered.

It is intended that approximately 2 days of this four-day module will focus on the operational contracts.  The remaining two days will be allocated to various financing-related documents – primarily the term sheet and the loan agreement, but also security documentation and guarantees.

The format is for each section to outline the risks that need to be managed, and then relate that to the drafting of the contractual terms, with consideration of the scope for adopting different approaches to both structure and terms.

A Short Review of Project Finance

A short recap of the essential features of the preceding modules

Consortia Agreements

Not only are the contractual obligations relevant to the party’s involved – it also an important part of lender evaluation (as well as grantors of concessions) how the ownership of a project may evolve over the term of the financing.

Turnkey EPC Contracts

Getting the infrastructure built and getting it working, is often the critical challenge.  Once a project is working it is unlikely to stop performing except where there are macro-economic developments or political interference.  We take a careful look at how the allocation of risks and responsibilities is structured and the contractual protections that are put in place.

Offtake Agreements

Offtake and Supply contracts are the same, viewed from the opposing parties’ perspective.  Power Purchase Agreements and Concessions also provide Revenue to the Project SPV but are dealt with in separate sections within this course.

Concession Agreements

This session captures the relationship between the government procurement agency and the private sector consortium.  We will go through the components of a Concession Agreement – and discuss the alternative structures that can be adopted and the merits of each.  The session also identifies the pros and cons of PPP financing structures, the alternative formats that can be adopted, and the documentation implications of the various approaches.

Financing Agreements

Module #1 in the Project Finance Academy suite of courses dealt with the financier’s analysis of a project and the structures adopted to micromanage the SPV’s single cashflow.  This session looks at the loan documentation itself.  It highlights the battlefield areas of negotiation between lenders and Sponsors, and also takes a deeper dive into those clauses in a loan agreement that are frequently misunderstood.

Security

Security is jurisdictionaly specific, so a number of legal opinions as conditions precedent to financing are inevitably involved. Project financing is the purest form of cashflow lending, especially where the project assets are immovable. Some projects go to great lengths to eliminate security over tangible assets.  This session looks at the various forms of security and assignment of rights discusses the practical implications

Quantification of the identified risks is critical to structuring the effective management of those risks. In many projects, the quantification is dynamic over the life of the project, and therefore the modelling has even greater importance. This 3-day module includes:

 

  • The objectives of the model – important if it is not to become over-engineered
  • The features that need to be incorporated if it is to accurately quantify volatility when scenarios are run
  • Best practice – to ensure that the model is robust
  • The implementation of Analysis worksheets – scenarios, sensitivities and break-evens
  • Practicals for the modelling of various types of financing worksheets
  • A detailed walk-through of a model to illustrate and explain the inter-connectivity of the worksheets and the derivation of the Free Cash Flow to support both debt serviceability and Sponsor IRR calculations

 

Where the financing is done with limited recourse to the company behind the project, the financing is dependent solely on the cashflows generated by the individual project itself. It becomes critical that the modelling is done to a high standard. In particular the model will need to test for the volatility of the cashflows. It is not the base case that kills, but the occurrence of conditions other than the base case over the life of the project.

The modelling of the project is the key part of the 3-stage analytical process:

  1. Identification of the circumstances in this particular project that could cause cashflow volatility – i.e risk identification
  2. Quantification of the cashflow impact in the event that those risks would occur
  3. Structuring the transaction to safeguard it from the potential occurrence of those risks.

In addition, the model may be important for other purposes, for example to determine the optimal financing structure, or to determine the feasibility through valuation of the project.

Model Design

There are four distinct approaches to financial modelling depending on the analytical purpose to which the model is intended to be put. We review each of these modelling approaches – the first three of which may have application in the context of project financing.

Modelling Best Practice

There are 8 principles of modelling best practice. The different principles will be addressed progressively throughout the module as opposed to a formal session, with illustrations of the problems if the principles are not respected.

The Analysis Worksheet

Models are built to be subjected to analysis. The precise detail and nature of the analysis will change from transaction to transaction. A well-built model has sitting on top of it a single worksheet where the analyst spends all of their time, controlling the inputs, observing the outputs and driving the functionality – scenarios, sensitivities or break-evens. If the analyst ever needs to leave the Analysis worksheet the model hasn’t been built properly.

Volatility Modelling Explained

There are 4 types of operating cost from a modelling perspective and 6 characteristics that need to be captured. The Operating Costs worksheet is the most important in the model because it is the main determinant of cashflow volatility.

Procedures Upon Receiving a Model

Any analysis performed on a model is nonsense if the model itself is nonsense or if it has material errors. There is no shortcut to model audit – to ensure that there are no errors at all – every unique formula in the model would have to be checked. The Model Review is a procedure that allows a recipient to discover if the model has credibility within a maximum time-frame of 30-40 minutes.

IRR Modelling

The primary performance indicator for the Sponsor is the IRR that they receive from both their financial and operational involvement in the project. In the majority of models it is observed that the IRR is calculated incorrectly (commonly using the XIRR function in excel) – which often with major error margins.

Financing Worksheets

A variety of different financing worksheets can be encountered in the various contexts of project finance. We review each of them and implement them in a series of practicals.

Finishing Touches to a Model

We cover a number of administrative aspects of developing and maintaining a project finance model.

To finish the Project Finance Academy and to qualify for the Diploma offered by the SBS-Swiss Business School, participants will attend at least one of the Selective Application days.  The purpose of each of these days is to review, test and evaluate the ability of the participants to apply the learning of the academy to practical project situations.  Each day focuses on the implementation of a project financing in a different sector and identifies the difference in detail associated in each case.  Each of the three sectors is allocated one day:

  • Infrastructure, PPPs
  • Power Generation – thermal & Renewables
  • Extractive Industries – oil, gas & mining

PROGRAM FEATURES

Diploma by:

Swiss Business School (SBS)

Rules

Anyone can attend 1 course in isolation. Nobody can attend course 5 unless they are enrolled on the whole programme.

This program is worth

5 ECTS

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GET IN TOUCH WITH OUR REPRESENTATIVE:

NENAD SPASOVSKI
Executive Education Programs Manager

IPMO Advisory AG
Sihleggstrasse 23 | 8832 Wollerau, Switzerland
Tel: +41445860567
Email: nenad@ipmoadvisory.com