project finance league tables

project finance league tables

Analyzing the Impact and Significance of Project Finance League Tables

1. Introduction to Project Finance League Tables

In this section, we illustrate the significance of league tables with a few examples. To provide some context, we should first briefly explain the basic organizing principles behind the compilation of league tables. As noted above, league tables are frequently published by various professional organizations. The types of league tables include equity and bond issues, merger and acquisition activity, IPOs, and project finance transactions. One of the more familiar names is that of “Thomson Financial” (hereafter TF). However, there are many others, whose source is “Project Finance International” (or PFI). By their very nature, league tables are “one-stage removed” from actual demand and supply. As such, the quantification must necessarily be precise rather than accurate. In particular, the financial rank of the player, which is frequently reported in the (business) financial press, is not associated with a statistical “confidence” region.

Introductory paragraphs in professional documents, such as academic research papers and academic literature reviews, serve to provide readers with sufficient background on the topic under review. This paper follows this tradition and introduces our study with the same aim. We note that our title refers to a widely followed publication, which is frequently cited by professional organizations in their quarterly and annual press releases for tracking their rankings and market shares. As such, a business encounter with a league table can be accompanied by great excitement, but little is known about the academic significance of such an encounter. This paper attempts to bridge this gap. In other words, our main aim is to provide a framework for thinking about league tables. We do this with the help of both numerical data, as well as a series of case studies. For empirical concreteness, we focus on project finance league tables, which traditionally cover syndicated term loans and are often published by investment bankers.

2. Methodology and Criteria for Ranking Projects

The paper is set out as follows: the first part of the paper presents the limitations and later reports the scope of the study. The research methodologies used to investigate R100 and M&A-I project finance league tables are examined next. The study’s conceptual framework and the conclusion are presented as the paper progresses. The report commences in the next part, part one, with a statement of the limitations of the research as well as defining the scope of the paper. The second part provides feedback on the project finance league table evaluation methods, together with an investigation into selected project finance agents’ views.

The review 100 (R100) and the M&A-International (M&A-I) project finance league tables identify project finance leaders. However, as the producers of the league tables offer little context in which to compare changes in the rankings, it is postulated that the leaders and their agents face onerous requirements in collecting and reporting inordinate volumes of information imparted in league table surveys without being duly compensated for their time and effort. This is the first paper to examine the methodology used by the R100 and the M&A league table survey criteria, exploring their relationship with the agent responsibilities and offering ways to enhance their relevance without increasing complexity.

3. Key Players and Trends in Project Finance

Although compared to the big picture of the total size of the fixed income markets, project finance is a relatively insignificant asset class, it plays an important role in the capital markets framework. It brings under the mining umbrella of the financiers two types of projects which, without the specialist skills necessary to hedge the project’s risks using structured finance techniques, would struggle to obtain long-term fixed rate funding at reasonable spreads over government bonds.

To be sure, the pace of substantial project finance transactions has not been struck, and no major shift in market structure or market terms could be pointed to during the last couple of years, in the way that a number of developments did mark the first half of the 1990s. This observation is borne out by a review of major project finance transactions since 1993, set out as the second appendix to this paper. Despite an evident fatigue following the flood of public service initiative/project after the prosecution of transactions which has characterized the last months in the UK, a second look for the financing of PFI or PPPs is required by the Italian situation, both for existing projects with closing still pending, as well as for the new tenders. Indeed, the situation in the UK left some doubts to the flexibility, cost, and feasibility mixed of the DBFO formula for long-term large-scale projects, more than did the basketball referees’ mutiny.

4. Case Studies of Top-ranked Projects

Royal Imtech developed a more advanced process in order to compete within the 2015 time frame. The 10 towers used in the Borssele II Extension project have been the first of their kind built under completely controlled qualifications, and the structures used in this innovative project are setting some kind of standard in today’s European offshore wind conditions. The first 3 monopiles for the RIFFGAT 108 MW BARD Monopiles supplied a total of 30 foundations to BARD for the Riffgat project in the German North Sea. BARD contracted Sif for the production of a 5 MW windmill and associated park infrastructure, especially for the construction of the transformer platform.

Royal Imtech’s first Borssele B Extension tower tripiles project, Theta Offshore Energy Detailed in Table ?, Royal Imtech, a new entrant to the football league, made an immediate impact. Using its local knowledge and experience, it beat more experienced but less established players to compete in the final four. Royal Imtech’s mission for Borssele II was quite simple: Develop a local product within a short time, enabling them to fulfill the rules they helped design. But for Imtech this was not simple. Local production demands long pipes, and no splices that can be made within the Borssele regulations and dimensions. To achieve this, the Harbor location in nearby Flushing was developed and a simple, self-sustaining design which had to be completely (electrically) welded in that same local harbor location.

5. Future Outlook and Implications for the Industry

Over time, a competitive market with wide participation and extensive levels of diversification will bring a discipline and vitality that a bench test of the capability of the finance market to go global through the turn of the century. However, despite its relatively mature stage, the 1990s will be the decade in which project finance finds a distinct role in the broader capital market context. The dynamic world of project finance should sustain this momentum in its development in coming years through the refinement of new structures and the new product that now characterize the industry. In the final analysis, though, the long-term survival of any finance market product should be based on the value that it adds to its client – the sponsor and the contractor. With more sophisticated and innovative financing techniques, borrowers will have valuable tools at their disposal that, in the long run, can help them manage financial risk better, and that embody all you would want from an efficient market.

In the future, we believe that the breakdown of these data into more specific groupings, possibly also with the addition of new categories, will result in both a newer World League Table and the proposed Regional and Special League Tables. The development of a separate project finance secondary market over the last three years should also create sufficient volume to present a comparable high-yield market data section. If the accuracy and consistency of loan spread data improves sufficiently, it may also be possible to publish an accompanying product finance loan spread index. As data quality improves and becomes universally available, the databases, and subsequently the tables, should become more relevant and provide a range of useful benchmarks for project financiers.