Page1of3
INTERNATIONALEMERGINGMARKETSPROJECTFINANCE
TERMANDYEAR
PaulClifford
ProfessorOfficeLocation:n/a
OfficePhone:646-322-8053
E-mail:[email protected]
OfficeHours:Day1xx:xx-xx:xx·Day2xx:xx-xx:xx
Canvas:PleasebesuretohaveyourannouncementandmessagingnotificationssettoASAP.
TEACHINGASSISTANTS
TAName1 [email protected]
TAOfficeHours
COURSESHORTDESCRIPTION
ThisInternationalEmergingMarketsProjectFinance(IPF)coursewillprovidestudentswithastrongpracticalandtheoreticalframeworktobeabletoanalyzecomplexinternationalprojectsfromfirstprinciples,andwillcoverboththestructuringaspectsofthisfinancialdiscipline(commercialandlegalframeworks,keyriskandmitigants,financialmodelling)aswellasreal-worldprojectfinancecasestudies.Overall,thecourseprovidesapracticalandquantitativeapproachtounderstandingprojectfinancetransactions;focusesonenergyandinfrastructuretransactionsinemergingmarkets;integratesprinciplesofcorporatefinancewithanunderstandingofspecifictechnologies,industrialorganization,regulatoryframeworkandcountry-specificpolicies;examinesforeignexchangeissues,taxation,riskevaluationandmitigationandkeycontractualstructures;exploresthefundamentalsofInternationalProjectFinance;andcomplementsandaddstothecurrentfundamentalsofProjectFinancecourse.Thiscourseisrelevanttostudentscontemplatingcareersinfinancinginternationaldevelopmentprojects,consideringdualengineering/financedegrees,orworkingfordevelopers/sponsorsofinternationalinfrastructureprojectsorinternationalfinancialorganizationssuchasMultilateraldevelopmentinstitutions(WorldBank,AsiaDevelopmentBank,Inter-AmericanDevelopmentBank,AsiaDevelopmentBank,AsiaInfrastructureInvestmentBank).COURSEDESCRIPTION
TheIPFcoursewillfocusondeepeningstudent’sacademicknowledgeandunderstandingofthefinancingstrategies,structuresandrisk/returnallocationsforinternationalinfrastructureprojectsindevelopingcountries.Thecoursewillspecificallyaddressandcoverthedynamicsof“South-South”infrastructureinvestment,financingandcooperation
Page2of3
acrosstheBRIC(Brazil,Russia,India,ChinaandSouthAfrica)countries.ItwillalsoanalyzetheemergenceandimportanceofnewGlobalfinancialinstitutionssuchastheAsiaInfrastructureInvestmentBank,thenew“WorldBankforAsia”createdbyChina.ThecoursewillalsocoverChina’snew$8Trillion“OneBelt,OneRoad”infrastructuredevelopmentpolicylinkingChinawithAsia,EuropeandEastAfrica.
Thecoursewillalsoanalyzesocialandenvironmentalrisksininternationalprojectsandthecurrentapproachoffinancialinstitutionstoassessandrankthesocialandenvironmentalrisksandimpactofprojectsandrelatedmitigationandmonitoringmeasuresrequiredtoensureprojectsaredevelopedinasustainablemanner.
COURSELEARNINGOBJECTIVES
Uponcompletionofthecourse,studentswillbeableto:
• Identifyandexplainkeyaspectsoffinancingforinternationalinfrastructureprojects,potentialsourcesoffinancing(exportcreditagencies,multilateralagencies,bonds,localcapitalmarkets)aswellascurrencyandpoliticalrisks
• Applypracticaltoolsandskillsetstoanalyzerisksandbusinessopportunitiesassociatedwithinternationalinfrastructureprojectsinkeyindustrysectors,includingbutnotlimitedto,power/renewableenergy,oilandgas,miningandmetalsandinfrastructure.
• Analyzeandinterprethowdebtandequityarebalancedwithinprojectfinancingstructuresanddevelopanappreciationinbreadthanddepthofthecorefinancialdocumentsandcommercialcontractsemployedinthesector.
ASSIGNMENTS
Designatethetypeforeachassignment(A-group,B-group/individual,orC-individual).
InordertoavoidambiguitythatmayleadtounintentionalviolationsoftheHonorCode,thedescriptiontypesforassignmentshavebeenstandardized.Theyarespecifiedinthetablebelow.
Type Designation Discussion of concepts
Preparation of submission Grade
A group / group Permitted with
designated group*
By the group Same grade for each member of the group
B
group / individual
Permitted Individually
(No sharing of any portion of the submission)
Individual
C individual / individual
None of any kind Individually Individual
D (An optional category to be defined in detail by the individual faculty member)
* The designated group can be either an assigned study group or a self-selected one.
Page3of3
REQUIREDCOURSEMATERIALS
Esty,Benamin.ModernProjectFinance:ACasebook.Otherclasshandoutswillbeprovidedalongwithadditionalrecommendedreadingmaterial.
CLASSROOMNORMSANDEXPECTATIONS
Classattendanceisimportantasthecourselearningswillbuildprogressivelyoverthesemesterandprovidethefoundationforthegroupcasestudyproject.Classparticipationisencouragedandexpectedinanalyzingtheprojectcasestudies.
INCLUSION,ACCOMMODATIONS,ANDSUPPORTFORSTUDENTS
AtColumbiaBusinessSchool,webelievethatdiversitystrengthensanycommunityorbusinessmodelandbringsitgreatersuccess.ColumbiaBusinessSchooliscommittedtoprovidingallstudentswiththeequalopportunitytothriveintheclassroombyprovidingalearning,living,andworkingenvironmentfreefromdiscrimination,harassment,andbiasonthebasisofgender,sexualorientation,race,ethnicity,socioeconomicstatus,orability.
StudentsseekingaccommodationintheclassroommayobtaininformationontheservicesofferedbyColumbiaUniversity’sOfficeofDisabilityServicesonlineatwww.health.columbia.edu/docs/services/ods/index.htmlorbycontacting(212)854-2388.
METHODOFEVALUATION
Participation 20%Assignments 40%ClassPresentation 40%
Evaluationwillbe20%fromclassparticipation,40%fromcasestudyassignment/answers,and40%fromaclasspresentation.
Atthestartofthecoursestudentswillgroupedintoteamstoprepareacasestudypresentationtotheclass.Studentswillberequiredtoanalyzespecificstrategic,commercialandstakeholderissues/questionsrelatedtotheprojectcasestudyinaclasspresentation.Eachteamwillpresenttheircasestudy,theremainderoftheclassisexpectedtocontributetothediscussion,askprobing,thoughtprovokingquestions,andproposealternativesolutionsandstrategies.
COURSEROADMAP/SCHEDULE(SEEATTACHED)
InternationalEmergingMarketsProjectFinance-CourseSchedule
Week1:
Class1: InternationalEmergingMarketsProjectFinance-CourseOverviewCourseIntroductionandObjectivesOverviewofProjectFinanceHistoryofProjectFinance
Class2: UnderstandingProjectFinance
• CurrentGlobaltrends• How/whenProjectFinanceisapplied• NecessaryprerequisitesforProjectFinancing• Financialcashflowanalysis
Reading:Chapter(s)fromtextbook.ReviewNamTheun2Laos/Thailandpowerprojectcasestudyhandoutforweek2.
Week2:
Class1: ProjectFinanceParticipantsandStructure• Keyprojectcontractparties• Agent/AccountBank• Typicalprojectcontracts• LoanAgreement
o Covenants/RepsandWarrantieso ShareholderAgreementandEquitySubscriptionAgreemento SecurityPackageo EventsofDefault
• FinancialModelClass2: ProjectFinanceSourcesofCapital
• Commercialbanks• ExportCreditAgencies• Multilateral/BilateralDevelopmentBanks• Insurancemarket• Equity–MezzanineandSubDebt• NamTheun2CaseStudydiscussion
Reading:ReadChapter(s)fromtextbook.ReviewandbepreparedtodiscusstheMozalProjectcasestudy
Week3:
Class1: ProjectFinanceRisksandMitigants• Construction/technologyrisk–CompletionandPerformance• Sponsorrisk• Operationalrisk• Revenue/Marketrisk• Financial(FX,currency)risk• Politicalrisk• EnvironmentalandSocialrisk• IndependentConsultants
Class2: MozalProjectcasestudy
• Projectoverview• Keyfinancingissues/challenges• Projectrisksandmitigation• Lessonslearnedandrecommendations
Reading:ReadChapter(s)fromtextbook.ReviewPetrozuatacasestudyandbepreparedtodiscuss.
Assignment#1DueWeek4:ReadCaseStudyhandoutprovidedandanswerthefollowing:
I. UnderstandtheParties:Drawaboxdiagramshowingtherelationshipsoftheparticipants
II. Understandthecontractsandcashflows:Drawaboxdiagramshowingthekeycontractsanddirectionofcashflows
III. IdentifytheStrengthsofProjectIV. IdentifytheWeaknesses/RisksofProjectV. EvaluatetheEnvironmentalconsiderationsandRegulatory/PoliticalEnvironmentVI. StateyourLoanRecommendationVII. MakesuggestedChangesifyourLoanRecommendationisnegative
Week4:
Class1: CaseStudyClassPresentationOverview(tobeconductedWeek6)
CLASSPRESENTATION:
Guidelines:Studentswillbedividedintoteamsandwillberequiredtoanalyzespecificstrategic,commercialandstakeholderissues/questionsrelatedtotheprojectcasestudyinaclasspresentation.Eachteamwillpresenttheircasestudy,theremainderoftheclassisexpectedtocontributetothediscussion,askprobing,thoughtprovokingquestions,andproposealternativesolutionsandstrategies
Situation:Eachteamwillrepresentdifferentkeyprojectstakeholders(sponsor/investor,lenders,NGO,HostGovernment)andwillberequiredtopresenttotheirrespectiveboards,creditcommittees,GovernmentDepartmentstheiranalysisandrecommendationsforinvesting,lendingorsupportingtheproject
Analysis:Analyzethekeyissues,strengths,risksandweaknessesoftheproject.Evaluatethefinancialprojections.Identifythekeyrisks,mitigantsandthepartiestakingthem.Herethestudentshouldapply,whereverappropriate,conceptsfromthecourseanditsreadings.
Recommendation&Conclusion: Make a recommendation on proceeding/not proceeding with the project.Defendyourrecommendation.If“NoGo,”describewhatmustbedone to make the decision a Go. Class2: PetrozuataCaseStudy
• ProjectOverview• Keyfinancingchallenges• Structuralissues• Riskallocationandmitigation• Keylessonslearned
Reading: Chapter(s) from text book. Read handout on “One Belt-One Road” and handoutChinaDailyNewspaperInterview–PaulClifford2014
Assignment#2DueWeek5:Reviewtheprojectcasestudy(provided).Itwillconsistofaprojectoverviewandkeyinformationregardingthecontractstructureandterms.Usingtheinformationprovideddevelopaprojectfinancecashflowmodelandanswerthefollowingquestions:
I. ListthekeyfinancialmodelassumptionsII. CalculatetheminimumandaverageDSCRaswellastheLLCRandmake
recommendationsregardinglenderfinancialcovenantsIII. Listconclusionsonrobustnessoftheprojectcashflowsandkeyvariables/risks
impactingprojectcashflowsustainabilityIV. Propose3sensitivityanalysisscenariosanddetailoutcome
Week5
Class1: ProjectFinanceModel• KeyelementsoftheprojectFinancecashflowmodel• Relationshipbetweenprojectcontracts,financedocumentsandcash
flowmodel• Creatingtheassumptions• Sensitivityanalysis,DSRA• Keyfinancialmodellendermetrics(DSCR,LLCR,PLCR)• Projectsponsorissues
Class2: US-AsiaEnergyMarketDevelopmentsandOutlook
• USShaleOil/NaturalGasMarket• USLNGExportmarket• South-SouthInfrastructureFinancingTrends
Week6
Class1: ClasspresentationClass2: ClassPresentation
