Indian Institute of Management

Ranchi

Course Number
Project & Infrastructure Finance
Course Outline
Term IV, 2017-19

INSTRUCTOR AND CONTACT INFORMATION

Name: Subir Chattopadhyay

E-mail: subir.chattopadhyay@iimranchi.ac.in
Office Tel: +91 9431701609

COURSE DESCRIPTION

Project Financing is a well-established technique for large capital intensive projects. It involves
financing projects on a stand-alone basis, so particular attention must be paid to who bears the
risks and who reaps the rewards. Project Financing focuses on raising of funds on a limited-
recourse or nonrecourse basis to finance an economically separable capital investment project
in which the providers of the funds look primarily to the cash flow from the projects as the
source of funds to service their loans and provide the return of and a return on equity invested
in the project. The terms of the debt and equity securities are tailored to the cash flow
characteristics of the project. For their security, the project debt securities depend mainly on
profitability of the project and on the collateral value of the project’s assets. Project financing
can be arranged when a particular facility or a related set of assets is capable of functioning
profitably as an independent economic unit. The sponsors of such a unit may find it
advantageous to form a new legal entity to construct, own, and operate the project. If sufficient
profit is predicted, the project company can finance construction of the project on a project
basis, which involves the issuance of equity securities (generally to the sponsors of the project)
and of debt securities that are designed to be self-liquidating from the revenues derived from
project operations. Project financing has usefulness, especially in enabling the emerging
economies, like India, to unlock the value of their natural resources and build the infrastructure
they need for their economic growth. To maintain a sustainable GDP growth, Govt. of India
recently has given considerable stress for huge investment in infrastructure development.
Therefore, the importance and significance of Project and Infrastructure Finance is growing in
leaps and bound. This course is important for budding Corporate and Investment Banking
professionals in strengthening their skillsets for handling large Corporate / Project Finance /
Syndication desk of a large Corporate/Investment Bank.
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COURSE OBJECTIVE

 Broadening understanding of Finance by venturing into the world of Project Finance,

emerging markets and international capital markets.
 Enhance ability to create value through investment and financing decisions
 Analyze how to structure investments, both contractually and organizationally
 Analyze how to value projects in general and equity contributions in particular
 Analyze how to identify and manage project risk and sovereign risks
 Analyze how to finance projects in terms of both the amount of debt and the types of
debt
 Understand Real Option Analysis for Project evaluation
 Understand best practices in Public Private Partnerships in concession rights awards,
contract design and negotiation
 Analyze how Venture Capital and Private Equity can be utilized for medium, small and
start-up projects

LEARNING OUTCOMES

After attending the course, the student should be able to:

1) Structure Infrastructure Projects – why do firms use Off-Balance sheet Project Finance
instead of On-Balance sheet Corporate Finance
2) Value Infrastructure Projects – what makes valuing highly leveraged firms difficult
3) Understand issues in managing risky Infrastructure Projects – how to identify, assess
and allocate Project Risks
4) Identify options to finance Infrastructure Projects through various financial instruments
5) Understand emerging role of Private Sectors in financing large Infrastructure Projects
through PPP mode of financing
6) Understand emerging role of Venture Capital and Private Equity in financing medium,
small and Start-Up Projects
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ALIGNMENTS OF INTENDED PROGRAM & COURSE LEARNING OUTCOMES

Program Learning Outcomes Course Learning outcomes

 Develop competence in participants to learn and adapt to the dynamic CL 1 to 6

national and international environments and strive for excellence.

 Orient the participants to apply knowledge and understanding of theories and CL 1 to 6, Case discussions &
concepts from basic disciplines and functional areas for creation, growth, and Assignments
management of organizations.

 Develop acumen to implement suitable strategies by critically analyzing both CL 1 to 6, Case discussions &
Assignments
internal and external organizational environment.

 Understand various approaches and techniques relevant to the organizational CL 1 to 6, Case discussions
processes, models and practices.

 Develop cultural sensitivity to appreciate diverse points of view in a global CL 1 to 6, Case discussions
environment.

 Exhibit high degree of integrity and ethics in behavior. Project Report & Presentations

REQUIRED COURSE MATERIALS AND READINGS

TEXT BOOK: (TB)

Project Financing: Asset-Based Financial Engineering by J.D. Finnerty, 3rd Edition,
Wiley Finance Series, Wiley

REFERENCE BOOKS: (RB)

Project and Infrastructure Finance: Corporate Banking Perspective by V. Srivastava
& V. Rajaraman, Oxford University Press
Projects: Planning, Analysis, Selection, Financing, Implementation, and Review by
Dr. Prasanna Chandra, 8th Edition, McGraw Hill Education (India) Pvt. Ltd., New
Delhi

EVALUATION

Mid Term and End Term Examination, Quizzes, Assignments, Projects and Class participation
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GRADING SCHEME

Component Mode Duration Weightage

Mid Term Exam Written (closed book) 1.5 hours 25%
(Compulsory)
Written (closed book)
End Term Exam 2 hours 30%
(Compulsory)
Closed Book (MCQ)
Quizzes/ Assignments 2 quizzes @ 15 min each 20%
Report and presentation by
Group Project group During the sessions 20%

Participation In-class Contribution Throughout the Term 5%

(Individual)
Total 100%

ACADEMIC DISHONESTY
i. It may be noted that any kind of copying/plagiarism by any student and/or malpractice in
examinations will be subject to strict disciplinary action under IIM Ranchi rules. If a student is
found guilty in any such case(s), it will be recorded in his/her personal file.

ii. The reports submitted by the students like Summer Project Reports/Term Papers/ Case Study
Report/ Project Report/CIS dissertation paper or any other report will go through the anti-
plagiarism software.

iii. In all cases where the software has reported more than 30% of plagiarism by a student or
group of students, there will be automatic conversion of the grade given in that component
into “F”.

iv. The faculty may even choose to report the matter to the PGP Committee which will temporarily
convert the course grade into “F” or an “I”, issue a show cause to the student (s) and based
upon the response of the student(s) assign any punishment or its combination from the options
below.

a. Expulsion from the Institute

b.Suspension for a specified period
c. “F” grade in the course concerned
d.Scaling down grades obtained in the specific subject
e. Repeating the course
f. Withdrawal of placement services
g.Suspension, withdrawal or made ineligible for scholarships

For details, kindly refer to PGP Manual.

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Course Schedule

Session Topics to be Readings and Book Assessment

covered in the course Chapter Criteria

1&2 Introduction to Project Finance – Concepts, TB: CH 01, 02 & 03 Quiz,

Components and Structures; Advantages & Assignment
Disadvantages; How does Project Finance differ & Exam
from Corporate Finance.

Case: Chad-Cameroon Petroleum

Development and Pipeline Project (A)

3&4 Analyzing Project Viability, Financial Modelling TB: CH 05, 10 & 11 Quiz,
and Project Evaluation Assignment
& Exam
Case: Texas High Speed Rail Corporation

5&6 Evaluation of Project using Real Option Analysis TB: CH 12 Quiz,

Assignment
Case: CITIC Tower II: The Real Option & Exam

7&8 Structuring the Project TB: CH 04, 08 Quiz,

Assignment
Case: Australia-Japan Cable: Structuring the & Exam
Project Company

9 & 10 Project Financing Plan and Instrument Design TB: CH 09, 13 Quiz,
Assignment
Case: Iridium LLC & Exam

MID TERM EXAMINATION

11 & Project Risk Management and Security TB: CH 07, CH 14 Quiz,
12 arrangements Assignment
& Exam
Case: Petrolera Zuata, Petrozuata C.A
Case: Poland A2 Motorway
Case: Basel II: Assessing the Default & Loss
Characteristics of Project Finance Loans (A)

13 & Special Purpose Vehicle (SPV) and Public RB & Class Notes Quiz,
14 Private Partnership (PPP) in Infrastructure Assignment
Projects; Various Models like BOO, BOT, & Exam
BOOT etc.

Case: Partnership Victoria: The Public Sector

Comparator
Case: Indiana Toll Road (B): Will Winner’s
Curse Strike Again
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15 & Venture Capital (VC) & Private Equity (PE) RB & Class Notes Quiz,
16 with emphasis to Finance Start-Up Projects Assignment
& Exam

17 & Loan Syndication: Structure, Process and RB & Class Notes Quiz,
18 Economics Assignment
& Exam
Case: Chase’s Strategy for Syndicating the
Hong Kong Disneyland Loan (A)

19 & Bankers’ perspective: Financing Term Loan, RB & Class Notes Quiz,
20 Working Capital Loan, Debt Restructuring of Assignment
Projects & Exam

Case: Restructuring Bulong’s Project Debt

END TERM EXAMINATION