Informações sobre o curso
Learn how debt and equity can be used to finance infrastructure investments and how investors approach infrastructure investments!
According to the OECD, the global infrastructure investment requirement by 2030 for transport, electricity generation, transmission & distribution, and water & telecommunications totals to 71 trillion dollars. This figure represents about 3.5% of the annual World GDP from 2007 to 2030.
The European Commission estimated, that by 2020, Europe will need between 1.5 - 2 trillion Euros in infrastructure investments. Between 2011 and 2020, about 500 billion Euros will be required for the implementation of the Trans-European Transport Network (TEN-T) program, 400 billion Euros for Energy distribution networks and smart grids, 200 billion Euros on Energy transmission networks and storage, and 500 billion Euros for the upgrade and construction of new power plants. An additional 38 - 58 billion Euros and 181 - 268 billion Euros in capital investment will be needed to achieve the targets set by the European Commission for broadband diffusion.
Traditionally investments in infrastructure were financed using public sources. However, severe budget constraints and inefficient management of infrastructure by public entities have led to an increased involvement of private investors in the business.
The course focuses on how private investors approach infrastructure projects from the standpoint of equity, debt, and hybrid instruments.
The course concentrates on the practical aspects of project finance: the most frequently used financial techniques for infrastructure investments. The repeated use of real life examples and case studies will allow students to link the theoretical background to actual business practices.
In the end of the course, students will be capable of analyzing a complex transaction, identifying the key elements of a deal, and suggesting proper solutions for deal structuring from a financial advisor's perspective.
Course Format
The course will consist of lecture videos, readings, and talks given by guest speakers. Although we do hope you will attend the entire course, it is possible to just focus on single topics.
Suggested Readings
The course is designed to be self-contained, there are no obligatory readings that must be acquired outside of the course.
For students interested in additional study material, you may refer to:
• Gatti Stefano, "Project Finance in theory and practice", Academic Press, 2nd edition, 2012.
Habilidades que você terá
FinanceCapital BudgetingProject ManagementCorporate Finance
Syllabus - What you will learn from this course
1
Section
Project Finance and the Network of Contracts
Module 1 explores the nature of project finance as a nexus of contracts. We will analyze the nature of the SPV (Special Purpose Vehicle) as an empty shell and the key contracts surrounding it (project contracts and financial contracts).
9 videos (Total 50 min), 5 readings, 1 quiz
9 videos
1.1 - Project Finance and the Network of Contracts Introduction3m
1.2 - What Is Project Finance?8m
1.3 - Financial Contracts: Shareholder6m
1.4 - Financial Contracts: Lenders4m
1.5 - Metro 5 #15m
1.6 - Industrial Contracts6m
1.7 - Metro 5 #28m
1.8 - Module 1 Takeaways2m
5 readings
Additional Material10m
Grading Policy10m
SLIDE SET WEEK 110m
About Quizzes - Read Carefully10m
Quiz 1 - ProjectCo Case10m
1 practice exercises
Project Finance and the Network of Contracts20m
2
Section
Syndicate
Module 2 analyzes the relationship between the SPV and its lenders. We will start from the introduction of what a syndicate is looking at the different roles performed by banks in a syndicate and the options available to organize such a syndicate. We will also look at the cost paid by the SPV for the organization of the financing and reflect on how the recent financial crisis has reshaped the syndicated loans market.
7 videos (Total 56 min), 1 reading, 1 quiz
7 videos
2.2 - What Is a Syndicate?10m
2.3 - What Roles Do Banks Perform?7m
2.4 - Which Syndication Strategy Can Be Used?10m
2.5 - How Much Does the Customer Pay?15m
2.6 - How Has the Financial Crisis Reshaped the Market?7m
2.7 - Takeaways2m
1 readings
SLIDE SET WEEK 210m
1 practice exercises
Syndicate20m
3
Section
Risk Analysis
Module 3 introduces the topic of risk in infrastructure financing. We will introduce a possible risk taxonomy (pre-, post-, and both pre- and post-completion risks) useful for analyzing risk as a preliminary step for its allocation to the parties best able to manage and control risk. Our final learning outcome will be the preparation of a risk matrix for an infrastructure project.
6 videos (Total 40 min), 1 reading, 1 quiz
6 videos
3.2 - Risk Taxonomy8m
3.3 - Pre-Completion Risks6m
3.4 - Post-Completion Risks7m
3.5 - Risks Common to Both Phases9m
3.6 - The Risk Matrix and Takeaways6m
1 readings
SLIDE SET WEEK 310m
1 practice exercises
Risk Analysis20m
4
Section
Capital Budgeting
Module 4 introduces capital budgeting of infrastructure deals. Firstly, we will present the key elements making up the budget of the construction phase and the sources of finance used for the construction of said infrastructure. We will then move on with the analysis of the budgeting of the operational phase pointing our attention to the sources and uses of funds. Special care will be given to the analysis of the system of reserve accounts of the SPV.
7 videos (Total 53 min), 1 reading, 1 quiz
7 videos
4.2 - Setting Up The Construction Phase Budget9m
4.3 - How to Finance Construction6m
4.4 - Exercise #1: Construction Phase Budgeting10m
4.5 - Setting up the Operational Phase Budget8m
4.6 - Exercise #2: Operational Phase Budgeting12m
4.7 - Takeaways2m
1 readings
SLIDE SET WEEK 410m
1 practice exercises
Capital Budgeting20m
5
Section
The Financial Sustainability of an Infrastructure Project
Module 5 covers whether an infrastructure project is doable or not from the dual perspective of the shareholders and lenders. We will answer this question in the module by analyzing the criteria for measuring the profitability for project sponsors and lenders. We will also look at measurements of financial sustainability and the key role played by cover ratios in disciplining the performance of the SPV.
7 videos (Total 52 min), 1 reading, 1 quiz
7 videos
5.2 - Profitability for Shareholders7m
5.3 - Profitability for Creditors10m
5.4 - From Profitability to Financial Sustainability9m
5.5 - Cover Ratios15m
5.6 - Cover Ratio Calculation3m
5.7 - Takeaways2m
1 readings
SLIDE SET WEEK 510m
1 practice exercises
The Financial Sustainability of an Infrastructure Project20m
6
Section
How Can Creditors Protect Themselves?
Module 6 looks at a number of subjects that share the need for creditors to protect themselves against pathological situations of the infrastructure. We will analyze the standard security package offered by the SPV to its creditors, together with an in-depth look at the system of covenants assisting the credit agreement. We will then look at the methods used to amortize a base facility in project finance.
7 videos (Total 51 min), 1 reading, 1 quiz
7 videos
6.2 - Security Package7m
6.3 - Covenants of the Credit Agreement10m
6.4 - How to Use Cover Ratios to Monitor the Borrower8m
6.5 - Loan Amortization Methods9m
6.6 - Application of Different Amortization Methods10m
6.7 - Takeaways3m
1 readings
SLIDE SET WEEK 610m
1 practice exercises
How Can Creditors Protect Themselves?20m
7
Section
Additional Videos and Final Quiz
Here you can find the lectures on the business cases and the final quiz
2 videos (Total 40 min), 1 quiz
1 practice exercises
Final40m
4.8
10%
Top Reviews
By TL•Apr 19th 2018
Excellent course that teaches the basics on project finance. Very informative to folks on Government who must deal with concessions in their field of expertise (as in Transportation and Energy).
By DS•Oct 23rd 2016
Very deep and interesting course on project finance. Best sincere recommendations for any specialists involved in such a subject to study the course. Thank you, dear professor Stefano Gatti.
Instructor
Stefano Gatti
DirectorAbout Università Bocconi
Our ambition is to develop students' potential and foster knowledge in Business, Economics and Law through innovative learning and research activities in a multicultural environment. Bocconi is a community that constantly innovates teaching and learning technologies and that strongly believes in the power of life-long learning and networking.
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