norton rose fulbright project finance

norton rose fulbright project finance

The Role of Project Finance in the Modern Economy: A Comprehensive Analysis of Norton Rose Fulbright’s Expertise

1. Introduction to Project Finance and its Importance

The use for limited-recourse financing has been facilitated by the trend toward the deregulation of the sectors in question, both for ideological reasons (e.g., the shift away from statism towards views more favorable to private enterprise) and for fiscal reasons (e.g., in countries facing difficulties in meeting their budget constraints). In the case of telecommunications, one of the economic sectors most affected by the deregulation trend of the past twenty years, substantial economies can come over time from the introduction and updating of new technologies, with capital costs providing a substantial portion of the total cost. Therefore, the availability of appropriate financing is very important.

First, a few general points on project finance (or, more generally, limited-recourse finance) are appropriate. Project finance is the process of financing long-term infrastructure, industrial projects, and public services based upon a non-recourse or limited recourse financial structure where project debt and equity used to finance the project are repaid from the cash flow generated by the project. Project finance is commonly used for development of the same types of projects around the world and is particularly attractive in emerging economies, in which the political conditions or the level of credit in that economy are insufficient to enable other types of financing.

2. Key Players and Stakeholders in Project Finance Deals

The category of active debt and equity participants in a given project’s financing can be a minor reflection of the myriad attributes, otherwise resemble a true securitization of the project’s cash flow, which ‘true sale’ of your project to separate investors so that the project’s promoters, all the project development or perform entity, will not carry any of the business risks associated with its operation will not be subject to an insolvency or termination proceeding upon the occurrence of problems at the project. For this purpose, the financing is typically arranged through a single-purpose project company (also known as a project sponsor) with a leveraged capital structure comprised of a combination of equity and nonrecourse or limited recourse debt.

The main stakeholders in a project finance speaking are the sponsors, the financial institutions, the host governments, and in many cases, the lenders signing on the project off-taker. But other potential participants in a given project financing include mezzanine debt providers and VIP debt purchasers, contractors and operators, other forms of private equity investors, export credit and multilateral finance institutions, insurance companies, suppliers and contractors to the project, and concerned local communities.

3. Norton Rose Fulbright’s Expertise in Project Finance Transactions

This allows Norton Rose Fulbright to advise clients throughout the entire lifecycle of a project, from feasibility and establishment, all the way to construction, ongoing operation, and maintenance, and eventually to restructuring and sale of assets. With a globally coordinated, unified approach, the team works across offices and regions to build strong teams of local specialists where they are needed. The practice has worked on all types of project financing between them, advising on cross-border and domestic projects, covering key industry sectors such as renewable energy and cleantech, oil and gas, mining and commodities, power, infrastructure, and the transportation and technology industry. Norton Rose Fulbright regularly provides industry publications, articles, in-depth reports, and client offers to ensure that it is consistently approached as both commercial and legal advisors to clients on legislative developments within their sector.

To ensure the legal advice that the client receives covers the full perspective, Norton Rose Fulbright’s Project Finance and Mining and Commodities practices are linked, allowing for expertise developed in the fields of project finance, project development, construction, mergers and acquisitions, environmental, tax, dispute resolution, and litigation to be connected under one umbrella, alongside the finance skillset that covers project finance, acquisition finance, asset finance, and leasing matters.

Norton Rose Fulbright’s global project finance depth covers 202 dedicated project finance lawyers and Tier 1 Project Finance rankings in Chambers and Partners across the EMEA, Middle East, and Asia regimes. Members of the practice have a highly reactive approach, are commercial and client-focused in orientation, and are able to guide clients through all stages of the project finance life-cycle, including up and downstream transactions, capital markets, finance, and tax aid.

4. Case Studies and Success Stories of Project Finance Deals Handled by Norton Rose Fulbright

We completed an onshore wind project in Texas. We have helped a joint venture comprised of a developer and a key global oil and gas company take ownership interests in three wind farms in Texas in multiple phases. We represented the sponsor and its other equity investors in connection with approximately $650m in back leveraged project financings for the wind farms, each of which had been SPP-archive financing, capitalized with sponsor equity and completed between 2013 and 2016.

We worked on an innovative offshore wind project in New York. We helped an important client develop the commercial strategies for its entry into the emerging U.S. offshore wind industry and the procurement and negotiation of the key project agreements for such client’s first U.S. project.

We worked on a landmark North American airport. We helped an owner in addressing financing and delivery considerations in connection with the various multi-faceted upgrade and expansion projects associated with LaGuardia Airport’s Central Terminal Redevelopment Project.

5. Future Trends and Innovations in Project Finance

Medium-term finance also gathers pace, a development that is often led by Export Credit Agencies, who provide cover for up to a 10-year term to reflect repayment of their own loans. Some ECAs also cover medium-term project finance loans to emerging market offtakers or project companies for political or credit risks. Interest in Islamic Finance is unchanged and is likely to grow in the Belt and Road project markets as well as in Africa, where the lack of a developed financial sector makes it the preferred form of long-term debt for some. Finally, innovation in the area of green financing is led by the EIB, who insist on a lower cost of borrowing if certain green credentials are met and, in fact, have a specific unit dedicated to this process called Green Bonds.

Although the history of project finance is usually limited to the advent of project bonds in the middle of the last century, recent innovation has seen the market, which is often restricted by insufficient long-term interest rates, work creatively with new fixed income instruments such as inflation-linked notes or quasi-equity instruments such as junior and mezzanine loan facilities. The recent move by the Asian Infrastructure Investment Bank to allow for partial partnering with private sector capital is also increasingly the norm, particularly in the PPP arena. Some of the less commercially driven worlds of concessional finance also now look to partner with the private sector, with the World Bank moving away from ‘pioneer’ instruments to either increasing the participation of commercial banks in syndicated commercial loans or direct project financing by the International Finance Corporation, and the quest for commercial debt in Africa by the African Development Bank.