Project Finance

project finance

Project finance involves funding a specific project (like infrastructure, power plants, or real estate) where the project's cash flows and assets are used to repay the debt and earn returns on equity.

Everything is based on the project performance. If the projects doesn't generate enough revenue, investors won't be repaid.

The risk is generally higher since it all depends on the project but it is distributed among the several investors.

Since the structure of project finance is more complex, it is difficult to restructure. Also, there are high supervision costs.