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    The document outlines a course on Project Finance taught at the Indian Institute of Management Kozhikode, covering topics such as structuring project financing deals, managing project risk, and alternative sources of financing through case studies and assignments, with students' learning assessed through class participation, end-term projects, and a group project finance report. The course is intended to help students apply concepts of corporate finance to evaluating and structuring financing for asset-intensive projects.

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    Baagpankaj@iimk Ac in

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    The document outlines a course on Project Finance taught at the Indian Institute of Management Kozhikode, covering topics such as structuring project financing deals, managing project risk, and alternative sources of financing through case studies and assignments, with students' learning assessed through class participation, end-term projects, and a group project finance report. The course is intended to help students apply concepts of corporate finance to evaluating and structuring financing for asset-intensive projects.

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    Project Finance

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    The document outlines a course on Project Finance taught at the Indian Institute of Management Kozhikode, covering topics such as structuring project financing deals, managing project risk, and alternative sources of financing through case studies and assignments, with students' learning assessed through class participation, end-term projects, and a group project finance report. The course is intended to help students apply concepts of corporate finance to evaluating and structuring financing for asset-intensive projects.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    170 views5 pages

    Baagpankaj@iimk Ac in

    Uploaded by

    PressesIndia
    The document outlines a course on Project Finance taught at the Indian Institute of Management Kozhikode, covering topics such as structuring project financing deals, managing project risk, and alternative sources of financing through case studies and assignments, with students' learning assessed through class participation, end-term projects, and a group project finance report. The course is intended to help students apply concepts of corporate finance to evaluating and structuring financing for asset-intensive projects.

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    The key takeaways from the document are that the course covers project finance, its difference from corporate finance, structuring and financing of projects, managing project risks, and applying various tools and techniques to evaluate project viability. The course aims to help students understand concepts of refinancing, syndicated borrowing, and structuring projects to minimize risks.

    The main topics covered in the course include introduction to project finance, structuring projects, analyzing project viability through various appraisal tools, managing project risks, valuation of projects, and financing projects through different sources including debt syndication.

    The course is evaluated through class participation (15%), assignments (35%), projects (35%), and end term examination (15%). Projects involve preparing a project finance report in stages and its presentation.

    INDIAN INSTITUTE OF MANAGEMENT KOZHIKODE

    Post Graduate Programme in Management


    Course Outline

    Course Code and Course Title PGP2F-010 Project Finance


    Course type Elective
    Pre-requisites (if any) Nil
    Course Credit 3
    Total no. of sessions 1*30
    Session Duration 1 hours
    Term VI
    Year and Batch PGP-II, 2020-2021 PGP 23
    Sections (if any) 1

    Instructor(s) Pankaj Kumar Baag


    Contact Details baagpankaj@iimk.ac.in
    Office 21, Faculty Block I
    Consultation Hours By Prior appointment only

    Introduction
    Project finance refers to financing arrangements where the terms and conditions of the debt
    are directly related to the specific purpose for which the proceeds will be used. In such deals,
    lenders often have to rely only on the cash flows from those projects with limited or no
    recourse to the broader balance sheet of the sponsoring corporation. Resultantly, such an
    arrangement is often referred to as “structured finance” since the repayment schedule and
    covenant packages for this debt are likely to reflect specific project cash flows or other
    characteristics of the assets being financed. Project financing is used by asset intensive
    industries as a way of mitigating risk. It is a popular method of financing cross-border
    projects, particularly in developing countries. For some assets, project financing is driven by
    the ability to capture tax advantages that are tied to specific assets or to particular issuers of
    debt (such as municipalities). Capital for project financing is provided through bank lending,
    public debt offerings, lease financing, and a wide range of governmental and
    quasigovernmental agencies.

    The course should broadly cover issues related to (i) choice between corporate and project
    finance, sources of project finance, valuing projects, managing project risk and structuring of
    the financing deal- Revenue requirements, Capital structure, debt syndication, securitization,
    (ii) Political, legal and market related issues pertaining to disclosures, supports and
    guarantees in infrastructure related projects (iii) alternative sources of finance: Conventional
    and non conventional (Infrastructure Debt Funds, Take out financing and issues related to
    debt restructuring).

    Learning Outcomes/Course Objectives


    The course aims at helping the student apply concepts of corporate finance in the context of
    projects such as:

    • Application of Advanced appraisal tools to evaluate projects


    • Understand and apply concepts of refinancing and syndicated borrowing to
    raise capital at competitive rates
    • Understand and appreciate the importance of structuring the project so as to
    minimize the political, legal and market risks.

    Textbooks and Learning Materials

    Text Book(s) : Nil

    Addl. Readings:

    1. Book: Project Finance: Asset Based Financial Engineering 3ed by Finnerty, J.D.,
    Wiley (1JDF)
    2. Reading: Characteristics of alternative price control frameworks: an overview by
    Chris Decker (2CD)
    3. Reading: Auction Theory for the new economy- Note by L.M. Ausubel (3LM)
    4. Reading: The Anatomy of Construction Risk: Lessons From a Millennium of PPP
    Experience-Note by Bain, Robert, and Jan Willem Plantagie. (4BR)
    5. Reading: Role of Institutional arrangements in financing project companies in Asia-
    Note by Devapriya and Alfen (5DA)
    6. Projects- Planning, analysis, selection, financing, implementation and Review By
    Prassanna Chandra latest edition McGrawHill (6PPC)

    Cases: HBR:

    1. Note: An overview of project finance and infrastructure finance- 2014 update --


    214083-PDF-ENG
    2. The Chad Cameroon Petroleum Development and Pipeline Project (A) --202010-
    PDF-ENG (B,C,D,E --addl. to be provided separately)
    3. Australia-Japan Cable: Structuring the Project Company -- 203029-PDF-ENG
    4. Chase’s Strategy for Syndicating the Hong Kong Disneyland Project Loan (A) --
    201072-PDF-ENG (B --addl. to be provided separately)
    5. Iridium LLC -- 200039-PDF-ENG
    6. Basel II: Assessing the Default and Loss Characteristics of Project Finance Loans (A)
    -- 203035-PDF-ENG (B --addl. to be provided separately)
    7. Project finance for Autopistas del Centro -- NA0266-PDF-ENG
    8. Poland’s A2 Motorway -- 202030-PDF-ENG
    9. Airbus A3XX: Developing the World's Largest Commercial Jet (A) -- 201028-PDF-
    ENG (B --addl. to be provided separately)
    10. Bidding for Antamina -- 297054-PDF-ENG (addl note to be provided separately)
    11. Note: Economic Framework for Assessing Development Impact -- 202052-PDF-ENG
    12. Petrolera Zuata, Petrozuata C.A -- 299012-PDF-ENG
    13. Politics, institutions and project finance: The Dabhol power project --HKU707-PDF-
    ENG
    14. Note: Equator Principles: An Industry Approach to Managing Environmental and
    Social Risks -- 205114-PDF-ENG
    15. Hamilton Real Estate: Confidential Role of Information for the CEO of Estate One --
    905052-PDF-ENG
    16. Hamilton Real Estate: Confidential Role of Information for the Executive VP of Pearl
    Investments -- 905053-PDF-ENG
    17. Financing the Mozal Project -- 200005-PDF-ENG
    18. Cheniere’s LNG Liquefaction strategy: pushing the boundaries of the project finance
    debt market -- IN1375-PDF-ENG
    Pedagogy Used/Learning Process

    The course would be delivered through a series of relevant cases. Each case study would be
    analysed by the class and a group in random would be chosen to present the case analysis.
    Each group before the class has to upload the respective ppt on VC which would be
    evaluated. Marks will be awarded for presentation, only if the student is present during the
    participation.

    Evaluation Components/Assessment of Student Learning

    Components Weight (%) Description


    Class 30% This is a case driven course and much of the learning
    Participation & comes from the discussions in the class. In order to ensure
    Assignments preparation for in class contribution to discussion,
    participants are expected to upload the assignments before
    the session begins. The assignments are assessed for the
    quality and rigour of the analysis.
    End Term 35% This component evaluates the collective application of
    concepts and techniques covered in the course.
    Projects 35% This component tests the ability of the participant to apply
    the tools, techniques and concepts learnt in the course to
    prepare a project finance report.

    Session Plan

    Session Module Topic Chapter No. / Reading


    material / Cases
    1-14 1 Introduction to project finance; Ch 1, 2, 3, 4 (1JDF) (soft copies
    difference from corporate finance; to be provided)
    regulatory pricing Note-Case 1
    2 Structuring projects, leveraging Ch 7, 8 (JDF) and Reading
    projects finance for developments, (DA5)
    financing projects (soft copies to be provided)
    Structuring-Case 2, 3, 17
    Financing-Case 4, 5, 6
    3 Analysing projects viability, Project Ch 5, 9, 10 (JDF)
    appraisal, Impact of refinancing on (soft copies to be provided)
    project appraisal Analysing viability-Case 4, 7, 8
    4 Managing risky projects, Auction Ch 13, 14 (JDF) and Reading
    design and strategy- principle, (LM3) (BR4)
    practice, impact on asset valuation (soft copies to be provided)
    Valuing-Case 9, 10
    Negotiation, project cost estimation Note-Case 11, 14
    Risky projects-Case 12, 13, 17,
    18

    Case (15, 16) together


    15-18 5 Presentations-Readings & Notes Readings and Notes-cases
    19-20 6 Project Finance report preparation Book: 6PPC
    discussion/practical Templates (XLS)
    Sample report
    To be provided
    21-30 7 Assignment presentation and project
    report presentation

    Additional Instructions (if any)

    Project Guidelines

    Max no. of people in the group: 6

    Objective: This course is intended to be an applied course and hence live cases should be
    preferred. In the process, one should be able to appreciate and understand the finer aspects of
    Project Finance.
    Time Line: By the end of third session, the group shall submit a three page proposal with
    respect to preparing a project finance report. Thereafter, the project report will have to be
    submitted in three stages: after 6th session; after 9th session; and after 12th session. The final
    report submission and presentation will be scheduled during 13th; 14th & 15th session.
    Evaluation: Of the 35 per cent weightage 5 percent is for the proposal, 10 per cent for the
    presentation and 20 percent for the report. Class participation in project carries 15%
    weightage (individual) will be added to the project weightage.

    The Presentation has to be made by all the members of the group; absentees do not get marks
    for the project presentation.

    Class participation

    Presentations and discussions

    Readings: 2CD, 3LM, 4BR, 5DA and HBR case and notes: 1, 6, 11, 13, 14, 15, 16 are part of
    class participation presentations and discussions to be presented by one group and discussed
    by two other groups.

    The Presentation has to be made by all the members of the group; absentees do not get marks
    for the presentation as well as for discussions.

    Assignments

    Presentations

    HBR cases

    The Presentation has to be made by all the members of the group; absentees do not get marks
    for the presentation
    Others

    a. Students are expected to be above reproach in all scholastic activities and disciplinary
    issues. Students who engage in scholastic dishonesty or indiscipline are subject to
    disciplinary penalties.
    b. Students are expected to be in the class on time. Late entry will not be permitted.
    c. Laptops should not be used in the class without being instructed to do so by the
    instructor.
    d. Mobile phones should not be brought to the class room
    e. The instructor reserves all rights to fine-tune / modify the above mentioned session plan
    and the grading scheme as may be required.

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