Infrastructure Finance

Week 10
12th December 2019
Revision Quiz

“Words are the only things that last forever. The most tremendous
monuments or prodigies of engineering crumble under the hand of
time. The Pyramids molder, the bridges rust, the canals fill up, grass
covers the railway track; but words spoken two or three thousand years
ago remain with us now, not as mere relics of the past, but with all
their pristine force”

Winston S. Churchill
May 1938 True or False?
Quiz
1. When undertaking an investment appraisal (pre-financing) what are the
essential inputs and outputs?
2. How is the Project IRR calculated?
3. For what purpose and when is the Project IRR calculated?
4. What is an Equity IRR ?
5. For what purpose and when is the Equity IRR calculated?
6. What is understood by the term “The Debt Carrying Capacity” of a Project?
7. How is the Debt Carrying Capacity calculated?
8. What steps can be undertaken to increase a Project’s Debt Carrying
Capacity, in the event that the pre-investment cash-flow appraisal
shows that it is insufficient to fully fund a project?
9. How can plots of land be used in support of investment in
infrastructure?
10. What are the macro-economic variables that impact on the bankability of a
Project?
11. What can be done to mitigate the impact of these on a Project’s capacity to
service its borrowings?
12. What are the main differences in the risk profile of a “Brownfield” vs. a
“Greenfield” investment?
13. Does the appraisal of a brownfield investment require different appraisal
metrics and ratios?
14. How might the financing plan for a greenfield project differ from a brownfield?

15. What does the ”Seniority of Lenders” mean?

16. Who are Senior Lenders?
17. What rights do the Senior Lenders have? And what goes into their “Security
Package”?
18. How is the Weighted Average cost of Capital for a Project determined?
19. What is the meaning
of ?
commercial viability
economic viability
financeability
bankability
creditworthiness
liquidity
volatility
of an infrastructure project or investment?

20. What are the forms (instruments and sources) that private sector equity investment in
a Project might take?
21. What do the managers of pension funds and the sponsors of infrastructure investment
have in common?
22. When and why might subordinated debt be preferred to “plain vanilla” equity?
23. By what means do equity investors in a Project receive returns on their investment?

24. What are the different ways in which the public sector can extract an economic benefit from
investment by the private sector in an infrastructure asset or undertaking?

25. What are the different instruments or ways in which the state can support or subsidise
investment in infrastructure?

26. What are the sources of revenue and profit for a commercial bank from lending to an
infrastructure project?

27. In what circumstances would a PPP be preferred over a public sector solution for an investment
in infrastructure?

28. And when might a PPP not be the preferred solution?

 .
Quiz contd

29. What is an appropriate number of consortia that we might expect to be pre-qualified for the
award of a concession in a competition initiated by a Grantor?
30. And for a final bid?
31. What are the features of a bid that are material for winning a competition?
32. What are the benefits and disadvantages of a “Competitive Dialogue” procedure?
33. When preparing the timetable for the selection of PPP Concessionaire what are the important
milestones that the Grantor needs to take into account?

34. From the point of view of a Consortium bidding in a PPP competition, how does the approach f
or sourcing finance from IFIs, export credit agencies or commercial banks differ?
35. When and why should projects be refinanced? What are the benefits?
36. What might inhibit or prevent a refinancing?
37. How shall the term ”off-balance sheet financing” be understood?
---For an SPV
--- For a corporate investor or sponsor
--- For a Government

38. What are the most important attributes of an accomplished infrastructure financier?