This financing model relies on future revenues as collateral for the lent amount, diverging from the conventional credit lending approach grounded in assets and balance sheets. Project Finance hinges on the project’s potential and anticipated future revenue upon completion. It’s well-suited for long-term ventures such as infrastructure, industrial projects, and public services, typically structured with non-recourse or limited recourse financial arrangements.
Repayment of debt or equity investment is derived from project-generated cash flow, forming the core of this funding approach. Project assets, rights, and interests serve as secondary assets. Project Finance is particularly appealing to the private sector due to its capacity for off-balance-sheet fund management.
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