Equity Financing for Large projects

Equity Project Financing

I’m privileged to have access to a funder that is seeking to finance projects worldwide; being a political stable country is a factor in the decision of taking the project on. The funding is in the form of quasi equity. Most sectors are welcomed. Please review below the key points to qualifying with this investor.

Key Points:

We require the principles of the projects to be RWA; contributing 10 to 15% for any financing below $100M and 1% for financing of $100M and above, no limit.
The funder focus is on the adequate ROCE (Return on Capital Employed). As a rule of thumb this should be a minimum of 20%.
Funder will take a 50% equity interest in the project; company and client draw down, in quarterly tranches (pre approved).
Funder will have joint signatory control of all major expenditures and will have one optional board seat.
The projects must be able to demonstrate a forecast economic value of at least twice the amount of injected funds into the project or company. For example: If $200M is injected the forecast economic value must be at least $400M to qualify.
Client can repurchase 50% equity interest at fair market value once the project is stabilized for 6 months.
Fee charges are 4% of each draw down amount.

Immediate needs to move forward: Executive Summary, CIS (Client Information Sheet), KYC (Know your Client) worksheet, questionnaire and POF.

What to expect from funder:

Projects are approved in principle.
Letter of intent sent with Due Diligence information pack
Due diligence performed.
Legal documentation raised and sent to client.
Documentation agreed upon.
Client to travel to funder and sign agreed documentation.
Draw downs are in quarterly tranches (pre-approved).

The loans are non-recourse (the client only risks the collateral they have in the project). Type of funding varies from deal to deal. In some cases the funder will take an equity position until the capital is repaid.

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