Project financing comes into effect when a clearly defined project is planned as part of a growth strategy, such as the construction and operation of a power station, a toll motorway or a public private partnership (PPP) project. However, it is important to rely on proven technology.
As initiator or sponsor of the project, you establish your own project company (= Special Purpose Company) and provide it with equity capital. The share of equity in this company is approximately one third of the project volume.
Advantages of project financing
- Unlike traditional financing, investors do not bear the risk alone (“risk sharing”)
- Support during the entire project term and development of the project company according to plan
Project financing is particularly suitable for companies (also called initiators or sponsors) that pursue a national or international expansion strategy while simultaneously minimising risks. It can also be used optimally in joint projects of several sponsors within the framework of a joint venture. The financing requirement should amount to at least EUR 10 million.
The analysis required for project financing is greater than for traditional corporate financing and therefore requires an open dialogue between you and our experts. The profitability forecast to be provided by the company, which determines the expected operative cash flow, is used to calculate the options for servicing the borrowed capital. The cash flows generated by the project serve as the main source of project financing.
In a so-called “due diligence” process, Bank Austria and external advisors examine possible project risks, try to eliminate them if possible or allocate them to the respective project partner, who is best placed to assess and manage the risk.