You intend to implement a precisely defined business venture (project), for example as part of a growth strategy. This might be the construction and operation of a power plant, a motorway toll system or a GSM network. It is important that such a project be based on a proven technology.
Project financing is especially suited to corporate customers (also called initiators or sponsors) that are pursuing a national or international expansion strategy while at the same time minimising their risks. This product is also suited to joint ventures with multiple sponsors. The financing needs should be at least 10 million Euro.
As the initiator or sponsor of the project, you establish a project company (special purpose company) and provide the necessary equity capital. The capital stock of this company must be approximately one third of the project volume.
The amount of debt capital that can be serviced by the company is based on the economic efficiency analysis to be submitted by the company in the form of a financial model (with budgeted income statement, balance sheet and cash flow statement), which is used to determine the expected operating cash flow. This calculation presents different scenarios (sensitivity analyses) in order to take potential developments of important influence factors into account. The cash flow generated by the project is the primary source of funding to service the financing.
Bank Austria assesses potential risks of the project together with external consultants as part of a so-called "due diligence" and tries to eliminate these risks, if possible, or allocates them to the respective project partner that can best assess and deal with the risk. This means that our experts work together with you to design a custom-tailored financing solution that minimises the risk for all involved. This risk-sharing approach offers investors a significant advantage in that they are not required to bear all risks associated with the project alone, as would be the case when financing the project on the sponsor’s own balance sheet (through a classic bank loan). We also accompany you for the entire duration of the project, and can convert the project financing into a traditional corporate financing in the event that the project company develops according to plan.
The results of these analyses also serve to identify operating performance indicators, which are agreed in the credit agreement in the form of covenants, and which serve as the basis for pricing and the necessary collateral.
The borrower in a project financing is the respective project company. As the sponsor, you contribute to the success of the project through your know-how, your experience in the sector and through the equity capital invested in the project company. Under so-called non-recourse financing (which stipulates no recourse to the sponsor), you are not subject to any liability in the form of a loan guarantee or other obligations. Variants with limited rights of recourse are often agreed, whereby specific obligations are to be fulfilled under exactly defined circumstances.
A successful project financing depends greatly on the willingness of all involved parties to work together in a partnership. The analysis procedure for project financing is more extensive than for classic corporate finance, and requires an open dialogue between you and our experts. These analyses serve as the basis for a risk profile, and the risk profile in turn as the basis for the design of an optimal, custom-tailored financing solution.
The risk profile is based primarily on your financial standing, your experience in the sector and the amount of equity capital paid into the project company.
Further factors for the success of the project are a solid outlook and the economic efficiency of the project, which is analysed by Bank Austria with the assistance of external experts and which is a source of important information for you as well.
Bank Austria is here to support you with a team of experts with a track record of a large number of successful transactions. We guarantee in advance the successful structuring and secured underwriting of large loan volumes with subsequent syndication on the national and international credit market.