Global Project Financing

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label Diverse autorenew 2025-09-29, 17:00 history_edu Silviu Marinescu
During the ongoing process of globalization many countries, both developed and emerging, are creating opportunities for the development of extremely large projects. These projects are in excess of $500 million US dollars and are very difficult to design, build and operate successfully. In order to mitigate the risks involved with these megaprojects, companies and governments both are interested in creating stand-alone entities that are successful or fail on their own merits, leaving the initiating organizations unaffected.

These projects create unique opportunities to study the effects of many of the underlying questions discussed in corporate finance. For example, the separation of the financing and investment decision, alternative governance systems, the discipline created by high leverage commitments and how to structure risk mitigation strategies.

The cases provide vehicles to address many unresolved issues in Corporate Finance. In the area of cost of capital, two troublesome situations are explored. How does a firm compute the cost of capital for a project in an emerging economy? The other, how to value a project when there is not a target capital structure throughout the life of the project.Another difficult issue is the process of risk mitigation for a one-project entity.

What affect does the lack of diversification benefits have on the firm's valuation? How can risk be best allocated among the stakeholders' of the project? In these large projects risk must be addressed in the construction, start-up and operating phases of the project. Which stakeholders' can bear these risks at the lowest cost?High leverage is common in Project Finance. Debt maturities are seldom longer the fifteen years. Thus, debt repayments must be sculptured to the forecast of the project's cash flows.

This results in the sophisticated use of senior and mezzanine financing vehicles which requires insightful financial modelling.

• Large-Scale Investments

• One project firms

• Developed vs. Emerging countries• Organizational Structure

• Contractual Structure

• Governance Structure



• Cash waterfalls

• Does diversification add value?

• Foreign project cost of capital

• Changing capital structure

Period
03-07-2013 - 31-07-2013 (4 weeks)

Target group
Master students

Course aim
Structure does affect value! Project Finance provides an alternative to Corporate Financing and creates an important realistic laboratory to study capital structure, risk management, valuation, contracting, and corporate governance. The complex cases provide a bridge from Corporate Financial Theory to actual projects and financial practice.

Credits
10.0 ECTS credits

Course fee
EUR 0: Students on a bilateral exchange programme do not have to pay. Freemovers are obliged to pay participation fees while tuition fees only apply to freemovers from countries outside the EU/EEA/Switzerland.

Course leader
Alan Frankle, Boise State University, United States

Aarhus University International Centre
Address: Hoeg Guldbergs Gade 4, building 1650 Aarhus C
Postal code: 8000
City: Aarhus
Country: Denmark
Website: http://www.au.dk/summeruniversity
E-mail: SummerUniversity@adm.au.dk
Phone: +45 8942 2320