Project Finance VS Corporate Finance
Project Finance VS Corporate 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.
Corporate finance deals with the financial activities of a corporation, including capital structure, funding, and actions taken to increase shareholder value
A company is responsible for raising and repaying capital, using their own balance.
The risk is spread across the company.
The company can work on many project. If the one project we are interested in it is not going well, the company can still use other revenues to repay debts.