Students
AFCP8077 – Project Finance
2020 – AFC term 3, Weekday attendance, City
General Information
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| Unit convenor and teaching staff |
Unit convenor and teaching staff
Cosmas Kapsanis
Contact via Email
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|---|---|
| Credit points |
Credit points
5
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| Prerequisites |
Prerequisites
ECFS866 or AFCP8003
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| Corequisites |
Corequisites
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| Co-badged status |
Co-badged status
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| Unit description |
Unit description
Project Finance typically involves an independent legal entity operating as a vehicle for owning and funding large scale projects. Capital sources for the entity will be a combination of equity from sponsors and debt from the bank or capital markets. The application of this financing approach is most commonly seen in the fields of infrastructure (both social and economic) and natural resource financing. Examples include the financing of toll roads, power stations, mines, pipelines, telecommunications networks, hospitals and public buildings such as courts and prisons. This course considers the financial techniques applied to solving such funding requirements in both the domestic and international context, and the business rationale for project finance. A comprehensive risk system is introduced for the identification and systematic allocation of risk in the various approaches to structuring a project financing. Funding, political-risk structuring, and recent capital-market developments are highlighted in class and through practical case studies. A heavy emphasis is placed on the international character of the project finance industry. The skills gained in this course will be relevant for corporate executives, bankers, lawyers, consultants and government officials who may be involved in large scale infrastructure and resource developments. |
Important Academic Dates
Information about important academic dates including deadlines for withdrawing from units are available at https://www.mq.edu.au/study/calendar-of-dates
Learning Outcomes
On successful completion of this unit, you will be able to:
- ULO1: Develop a thorough grounding in the characteristics that make a large scale investment a candidate for Project Finance.
- ULO2: Review and assess sources of finance and the requirements to obtain funding from different providers.
- ULO3: Develop skills to (i) identify and evaluate risks in large scale investments and (ii) structure transactions in mitigation of those risks.
- ULO4: Gain exposure to notable contemporary transactions that inform developments in the policy and practice of project and infrastructure funding.
- ULO5: Make an analytical assessment (including valuations and cash flow modelling) of a proposed investment from the perspective of different stakeholders, including lenders, sponsors and investors and other involved parties such as governments.
General Assessment Information
Information - Extension Requests / Penalties
Pre-course Assignment
No extensions will be granted.
There will be a deduction of 10% of the total available marks for each 24 hour period or part thereof. This penalty does not apply for cases in which an application for Special Consideration has been made and approved.
No submission will be accepted after solutions have been discussed or posted by the lecturer. As this normally occurs on day 2 of classes, students need to be aware that submissions are rarely accepted beyond the first 24 hour late period.
Further information on submitting an Application for Special Consideration can be found at https://students.mq.edu.au/study/my-study-program/special-consideration.
Participation
Students who do not attend receive a mark of zero. This penalty does not apply in cases where an application for Special Consideration has been made and approved.
Further information on submitting an Application for Special Consideration can be found at https://students.mq.edu.au/study/my-study-program/special-consideration.
Assignment
No extensions will be granted. There will be a deduction of 10% of the total available marks made from the total awarded mark for each 24 hour period or part thereof that the submission is late (for example, 25 hours late in submission incurs a 20% penalty). This penalty does not apply for cases in which an application for Special Consideration is made and approved.
Late submissions will be accepted up to 96 hours after the due date and time.
Further information on submitting an Application for Special Consideration can be found at https://students.mq.edu.au/study/my-study-program/special-consideration.
Final Exam
Refer to the relevant MAFC timetable for information on your online final exam https://www.mq.edu.au/about/about-the-university/faculties-and-departments/business/study-with-us/macquarie-applied-finance-centre/timetables.
Deferral of an examination is not permitted unless an application for Special Consideration is made and approved.
Students who do not attend receive a mark of zero. This penalty does not apply in cases where an application for Special Consideration has been made and approved.
Further information on submitting an Application for Special Consideration can be found at https://students.mq.edu.au/study/my-study-program/special-consideration.
Assessment Tasks
| Name | Weighting | Hurdle | Due |
|---|---|---|---|
| Assignment | 15% | No | Refer to iLearn |
| Participation | 15% | No | Refer to iLearn |
| Assignment | 20% | No | Refer to iLearn |
| Final Exam | 50% | No | Refer to Timetable |
Assignment
Assessment Type 1: Case study/analysis
Indicative Time on Task 2: 4.00 hours
Due: Refer to iLearn
Weighting: 15%
You will be given a case study and required to write a 1,500 word paper addressing issues related to the case.
On successful completion you will be able to:
- Develop a thorough grounding in the characteristics that make a large scale investment a candidate for Project Finance.
- Review and assess sources of finance and the requirements to obtain funding from different providers.
Participation
Assessment Type 1: Participatory task
Indicative Time on Task 2: 0.00 hours
Due: Refer to iLearn
Weighting: 15%
3 hours worth of case study readings and preparation to be called on at random in class to present.
On successful completion you will be able to:
- Develop a thorough grounding in the characteristics that make a large scale investment a candidate for Project Finance.
- Review and assess sources of finance and the requirements to obtain funding from different providers.
- Develop skills to (i) identify and evaluate risks in large scale investments and (ii) structure transactions in mitigation of those risks.
- Gain exposure to notable contemporary transactions that inform developments in the policy and practice of project and infrastructure funding.
Assignment
Assessment Type 1: Case study/analysis
Indicative Time on Task 2: 10.00 hours
Due: Refer to iLearn
Weighting: 20%
The components include a financial model and a written report detailing the conclusions. Information must be in MS Excel and text in MS Word documents.
On successful completion you will be able to:
- Develop a thorough grounding in the characteristics that make a large scale investment a candidate for Project Finance.
- Develop skills to (i) identify and evaluate risks in large scale investments and (ii) structure transactions in mitigation of those risks.
- Make an analytical assessment (including valuations and cash flow modelling) of a proposed investment from the perspective of different stakeholders, including lenders, sponsors and investors and other involved parties such as governments.
Final Exam
Assessment Type 1: Examination
Indicative Time on Task 2: 17.00 hours
Due: Refer to Timetable
Weighting: 50%
Section A will be a case study with essay responses worth 55% of the exam total. Section B will be short and multi-choice questions worth 45% of the exam total. The exam Case will be available via iLearn one week in advance of the Final Exam. This is an open book exam.
On successful completion you will be able to:
- Develop a thorough grounding in the characteristics that make a large scale investment a candidate for Project Finance.
- Review and assess sources of finance and the requirements to obtain funding from different providers.
- Develop skills to (i) identify and evaluate risks in large scale investments and (ii) structure transactions in mitigation of those risks.
- Gain exposure to notable contemporary transactions that inform developments in the policy and practice of project and infrastructure funding.
- Make an analytical assessment (including valuations and cash flow modelling) of a proposed investment from the perspective of different stakeholders, including lenders, sponsors and investors and other involved parties such as governments.
1 If you need help with your assignment, please contact:
- the academic teaching staff in your unit for guidance in understanding or completing this type of assessment
- the Writing Centre for academic skills support.
2 Indicative time-on-task is an estimate of the time required for completion of the assessment task and is subject to individual variation
Delivery and Resources
CLASSES
Timetable: Detailed timetable for classes are available at https://www.mq.edu.au/about/about-th e-university/faculties-and-departments/business/study-with-us/macquarie-applied-finance-centre/ timetables.
Consultation Times: Students who wish to contact any of the teaching staff may do so through individual consultation with the lecturer by email in the first instance, if necessary.
REQUIRED AND RECOMMENDED TEXTS AND/OR MATERIALS
Text: Nil.
Additional Readings:
- The unit iLearn site contains all the requisite reading material for the classes, class assignments, final examination, and case studies, as well as background articles, and reference material/glossary.
- Students should assume these readings are examinable unless otherwise advised.
- Additionally, students will gain benefit from using reputable sites on the internet to read around the topics covered in class.
Lecture Slides: Available via iLearn after the relevant class.
Pre-unit Materials:
By the first class, students must have read the designated pre-course materials available in iLearn and prepared for the class case discussions.
Useful References:
- Brealey & Myers, Principals of Corporate Finance, 7th Edition or later.
- Tinsley, Advanced Project Financing: Structuring Risk, 2nd Ed., Euromoney Books, London, 2014.
- Tinsley, Practical Introduction to Project Finance, DCGardner/Euromoney Workbook, 2nd Ed., London, 2000.
- Fabozzi & deNahlik, Project Financing, Euromoney, 8th Ed., London, 2012.
- There are books available to help develop your Excel skills, which are needed for assignments. Two helpful books are:
- Craig W. Holden, Excel Modelling in Corporate Finance, 2nd ed., Pearson Prentice Hall, 2005; or
- Michael Rees, Financial Modelling in Practice, Wiley, 2008.
Calculators: Any ordinary calculator will be sufficient for classwork and the Final Exam.
Assumed Knowledge:
- ACFP8003 Corporate Finance is a pre-requisite.
- Basic Excel modelling.
Assumed Access: Access to a computer with word processing and spreadsheet capability is assumed, as is general student computer literacy.
TECHNOLOGY USED AND REQUIRED
Unit iLearn Site:
- Found by logging on to iLearn ilearn.mq.edu.au, then clicking on AFCP8077 Project Finance.
- This is where you will find forums, downloadable resources and links to important pages.
Important:
- It is important that you familiarise yourself with the unit’s iLearn site.
- Students should check the unit’s iLearn site regularly (minimum twice a week and prior to all lectures) and look for updates and distribution of materials (including case studies) related to the unit or assessments and, if relevant, participate in forum discussions.
Unit Schedule
SESSION 1
Topics:
• Introduction to Project Finance and Large Scale Investments
◦ Course plan, expectations & assessments
◦ Defining ‘Project Finance’
◦ Sectors, scope and scale
• Structure & Risk
◦ The stakeholders
◦ Identifying risks
◦ Structuring consequences of risk allocations
SESSION 2
Topics:
• Valuing Projects
◦ DCF analysis
◦ Banking analysis: CF ratios and debt sizing
◦ Financial models
◦ Introduction to modeling assignment
SESSION 3
Topics:
• Managing Risky Projects
◦ Avoiding failure – Discussion based on assigned readings
▪ Sydney Light Rail
◦ Due diligence
◦ Equator principals
◦ International projects
SESSION 4
Topics:
• Financing Projects
• Sources of Funds
◦ Equity investors/sponsors
◦ Debt investors/banks and specialised lenders
◦ Capital markets
◦ Governments and multilateral bodies
SESSION 5
Topics:
• Transaction Lifelines and Tools
◦ Information memorandum
◦ Terms sheets
SESSION 6
Topics:
• Practice & Review
◦ Group presentation
◦ Class quiz
◦ Revision
Policies and Procedures
Macquarie University policies and procedures are accessible from Policy Central (https://staff.mq.edu.au/work/strategy-planning-and-governance/university-policies-and-procedures/policy-central). Students should be aware of the following policies in particular with regard to Learning and Teaching:
- Academic Appeals Policy
- Academic Integrity Policy
- Academic Progression Policy
- Assessment Policy
- Fitness to Practice Procedure
- Grade Appeal Policy
- Complaint Management Procedure for Students and Members of the Public
- Special Consideration Policy (Note: The Special Consideration Policy is effective from 4 December 2017 and replaces the Disruption to Studies Policy.)
Students seeking more policy resources can visit the Student Policy Gateway (https://students.mq.edu.au/support/study/student-policy-gateway). It is your one-stop-shop for the key policies you need to know about throughout your undergraduate student journey.
If you would like to see all the policies relevant to Learning and Teaching visit Policy Central (https://staff.mq.edu.au/work/strategy-planning-and-governance/university-policies-and-procedures/policy-central).
Student Code of Conduct
Macquarie University students have a responsibility to be familiar with the Student Code of Conduct: https://students.mq.edu.au/study/getting-started/student-conduct
Results
Results published on platform other than eStudent, (eg. iLearn, Coursera etc.) or released directly by your Unit Convenor, are not confirmed as they are subject to final approval by the University. Once approved, final results will be sent to your student email address and will be made available in eStudent. For more information visit ask.mq.edu.au or if you are a Global MBA student contact globalmba.support@mq.edu.au
Student Support
Macquarie University provides a range of support services for students. For details, visit http://students.mq.edu.au/support/
Learning Skills
Learning Skills (mq.edu.au/learningskills) provides academic writing resources and study strategies to help you improve your marks and take control of your study.
The Library provides online and face to face support to help you find and use relevant information resources.
Student Services and Support
Students with a disability are encouraged to contact the Disability Service who can provide appropriate help with any issues that arise during their studies.
Student Enquiries
For all student enquiries, visit Student Connect at ask.mq.edu.au
If you are a Global MBA student contact globalmba.support@mq.edu.au
IT Help
For help with University computer systems and technology, visit http://www.mq.edu.au/about_us/offices_and_units/information_technology/help/.
When using the University's IT, you must adhere to the Acceptable Use of IT Resources Policy. The policy applies to all who connect to the MQ network including students.