Practice Areas: Legal process Outsourcing

Project Finance

Project finance is the financing of long-term infrastructure, industrial projects and public services based upon a complex financial structure where project debt and equity used to finance the project are paid back from the cashflow generated by the project rather than the general assets or creditworthiness of the project owners. Because of this structure, the debt is said to be "nonrecourse." The financing is typically secured by the project assets, including the revenue-producing contracts. Generally, special purpose vehicles (SPVs) are created for each project.

Project finance is more complicated, and more expensive, than alternative financing methods. It is most commonly utilized in the mining, transportation, telecommunication and public utility industries, which are subject to a number of insurmountable technical, environmental, economic and political risks. To cope with these risks, projects in these industries (such as power plants or railway lines) are generally completed by a number of specialist companies operating in a contractual network with each other. The various patterns of implementation are known as "project delivery methods."

The financing of these projects must also be distributed among multiple parties, so as to distribute the risk associated with the project while simultaneously ensuring profits for each party involved. Usually, a project financing scheme involves a number of equity investors, known as sponsors, as well as a syndicate of banks which provide loans to the operation. The loans are most commonly non-recourse loans, which are secured by the project itself and paid entirely from its cash flow. A riskier or more expensive project may require limited recourse financing secured by a surety from sponsors. A complex project finance scheme may incorporate corporate finance, securitization, options, insurance provisions or other further measures to mitigate risk.

We at H&S have extensively worked on international project finance and major infrastructure projects, energy projects, international financing and privatizations, and trade and customs disputes. Our particular strength lies in combining public international law knowledge with wide commercial experience.

We at H&S accept the fact that the part of the challenge of any project financing is trying to reconcile the different objectives of the various interested parties in such a way that each party, although possibly compromising its ideal position, nevertheless generally stands to gain if the project is completed. A good understanding of what each party’s general objectives are is an essential pre-requisite to any sensible negotiations and we at H&S appreciate the same and act as per Our Clients end objectives in mind.

We at H&S help and counsel our clients on projects ranging from infrastructure & construction, oil and gas production plants, mining, power, energy, pulp and paper units, seaport & airport facilities, telecommunications, hospitals, real estate and the like. The breadth and depth of our project finance experience covers many more industry sectors including: project finance initiatives/public-private partnerships, roads and motorways, petrochemicals, wind, water and wastewater treatment, and industrial, manufacturing and other infrastructure facilities.