Capital-raising renewable energy projects now have direct access to private lenders through the Project Finance Exchange (PFX), a closed private capital market launched in April this year. Hedge, private equity & debt, alternative investment and other private capital funds along with investment banks and family offices have so far registered over $30bn to invest in new projects, with a clear preference for renewable energy showing in early registrations. Projects raising between $5m and $5bn+ can now present their opportunities directly to private capital fund managers through PFX.
Project finance is defined as lending predicated on the track record and financial stability of whoever is contracted to buy the output from the built project, and not on forecasts in a business plan. For energy projects this means that lenders look to the track record and financial stability of whoever is contracted, through the PPA (Power Purchase Agreement) to buy the output from the finished plant. The preferred funding structure is private debt as this provides the risk-mitigated long-term returns that most private investors look for. Genuine project finance has always been non-recourse, meaning that project principals carry no financial liability whatsoever. Insurance underwriting is also playing an increasing role in the market, resulting in additional comfort for lenders.
Listing of projects on PFX is free and quality controlled by PFX Regional Managers who are all seasoned project finance intermediaries. They ensure that the Elevator Pitch, Executive Summary and Full Deck meet the exacting requirements of private capital lenders, ensuring a much smoother capital-raising process. Project leaders can start their capital raising process by visiting the ‘Submit Project’ zone at PFX.
David Rose, PFX Chairman said: “We are just now starting to see investor preferences and other data starting to show but the absolute clear preference, with 100% of registered funds, is renewable energy and waste-to-energy emerging as the clear favourite. For both lenders and borrowers the project finance structure is far more preferable to any form of traditional finance. We’re constantly in need of new renewables opportunity listings to meet the demands of our registered funds.”
PFX is a closed, private capital market meaning no identifying information from funds or projects is available to the public domain. The Elevator Pitch, which notifies PFX registered financiers see for deals matching their preferences, and also viewable on the PFX home page, contains no information on who owns the project or its counterparties. Only registered funds can click through to the Executive Summary where all this information is provided.
Because of its unique structure, producing a funding application for project finance is far different to the traditional business plan or investment prospectus. PFX has published a user guide The RAISING PROJECT FINANCE Handbook, which is available from their site.
Project Finance Exchange | http://www.projectfinanceexchange.com