Project finance includes the extension of equity and debt capital to a corporate project. Financing is provided in accordance with the revenues that a long-term initiative is likely to produce. The managers of these projects are largely responsible for financial provisions, including working with and arranging beneficial financing for an endeavor. To accomplish this, the project finance manager must remain in communication with the various participants of a project. They may include other managers and consultants as well as financiers, contractors and construction workers that help to clearly understand the near-and-long term financial needs and revenue potential of the undertaking.
Although the tasks of a project finance manager may vary depending on the nature of the venture, there are some common types of financing structures applied in this market. The job of a project finance manager is likely to involve determining the most appropriate type and subsequently collaborating with financing professionals, such as investment bankers, in an attempt to secure the resources. The different types of financing tools are in both the equity and debt capital markets.
It's possible that a project finance manager could pursue equity investors to partner with and support an endeavor. Non-recourse loans might be another viable type of financing that the manager arranges with providers. In this type of financing, the equipment or property used in project finance serves as collateral. In the event that the project does not create cash flow as expected and developers default on a loan, lenders become entitled to those assets. A finance manager ideally works with the financiers to obtain the most appropriate type of financing for a project with the most attractive terms possible based in part on a project's risk.
A project finance manager could be involved with a venture that involves upgrading existing infrastructure to a better standard, or with an endeavor that is a new development and that must be constructed from the ground up. Depending on the location of the project, a finance manager is likely to need to coordinate with different parties. These participants could be building owners, project developers, and consultants. The liaising with these various participants becomes relevant to financing because the capital extended in project finance is dependent on future revenues generated from the project. By gaining a reasonable expectation for the timing and flow of new capital that is expected, a project finance manager can provide more relevant details to the providers of capital.