Project Finance and Infrastructure Funding Simulation

In the simulation, participants will:

• Establish an SPV and design the optimal capital structure (debt vs. equity) for the project.

• Create a dynamic, integrated financial model to project revenues, costs, and cash flows over the project's lifecycle.

• Present your project to a simulated bank syndicate, negotiate loan terms, interest rates, and covenants.

• Develop an investment teaser and pitch to institutional investors to secure equity funding.

• Respond to randomized events during construction and operation, making critical decisions to keep the project on track.

• Calculate and present the project's equity IRR and overall viability to your stakeholders.

• Understand the fundamental principles and structure of project finance and its application in infrastructure.

• Construct a comprehensive project finance model from the ground up, incorporating debt schedules and sensitivity analysis.

• Evaluate project viability through key metrics like NPV, IRR, and Debt Service Coverage Ratios (DSCR).

• Differentiate between various funding sources, including senior debt, mezzanine financing, and equity.

• Identify, assess, and mitigate key risks throughout the project lifecycle (pre-completion and operational).

• Negotiate effectively with different stakeholders, including lenders, investors, and government entities.

• Appreciate the strategic role of Public-Private Partnerships (PPPs) in modern infrastructure development.

1. Team Formation and Project Assignment Participants are divided into sponsor teams and assigned a unique infrastructure project with specific technical and economic parameters.

2. Feasibility and Structuring Teams analyze their project, build the initial financial model, and propose a financing structure.

3. Funding and Negotiation Teams enter negotiation rounds with simulated banks (for debt) and investors (for equity). The terms they secure directly impact their model's outputs.

4. Execution and Risk Management Once funded, teams proceed through construction and into operation. Random events (cost overruns, regulatory changes, demand shocks) test their risk mitigation strategies.

5. Final Review and Assessment The simulation concludes with a final review of each project's financial performance. Success is measured by the equity returns generated and the overall stability of the project.

• Who is the target audience for this simulation? This simulation is ideal for MBA students, finance professionals, engineers, and government officials specializing in infrastructure, investment banking, corporate finance, and public policy.

• What are the prerequisites to participate? A basic understanding of corporate finance and financial accounting is helpful. The simulation is designed to be accessible to motivated learners, with built-in guidance on core concepts.

• How long does the simulation take to complete? The simulation can be run as an intensive 1-2 day workshop or extended over several weeks as part of a university course or corporate training program.

• Do we need advanced Excel skills? While beneficial, advanced skills are not mandatory. The simulation focuses on the strategic decisions behind the numbers. Guidance is provided on the essential modeling techniques.

• What makes this simulation different from a traditional case study? Unlike a passive case study, this is a dynamic, hands-on experience. Your decisions have immediate, quantifiable consequences on the project's outcome, fostering deep, experiential learning.

• Can this simulation be customized for our institution? Yes, we offer customization options, including tailoring projects to specific regions or sectors.

• How is the winning team determined? Teams are assessed on a balanced scorecard including financial performance, successful debt repayment, risk management effectiveness, and the robustness of their final project proposal.

• Profitability and financial stability of the Team project

• Evaluation of the technical accuracy, structure, and assumptions within your team's financial model and supporting documentation.

• Assessment of the terms (interest rates, covenants, equity splits) secured during funding rounds with banks and investors.

• Feedback from team members on collaboration, contribution, and application of strategic thinking.