Information regarding Extension Requests

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. 

Note: Applications for Special Consideration must be made within 5 (five) business days of the due date and time. 

Refer to MAFC Program Rules at https://mafcstudents.mq.edu.au/ for information on the University’s Special Consideration Policy.

 

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.

Note: Applications for Special Consideration must be made within 5 (five) business days of the due date and time. 

Refer to MAFC Program Rules at https://mafcstudents.mq.edu.au/ for information on the University’s Special Consideration Policy.

 

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.

Note: Applications for Special Consideration must be made within 5 (five) business days of the due date and time. 

Refer to MAFC Program Rules at https://mafcstudents.mq.edu.au/ for information on the University’s Special Consideration Policy.

 

Final Exam

You are expected to present yourself for examination at the time and place designated in the relevant MAFC Timetable at 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.

Note: Applications for Special Consideration must be made within 5 (five) business days of the due date and time. 

Refer to MAFC Program Rules at https://mafcstudents.mq.edu.au/ for information on the University’s Special Consideration Policy.

 

 

CLASSES

Face-to-Face Teaching: Generally 20 hours.

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:

• Information papers on statistics, regression, accounting and other material may be found at http://mafcstudents.mq.edu.au/new-to-mafc/pre-course-materials/. Students should work through this material prior to commencing the degree. The material will remain a useful reference as students progress through the program.
• 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 DESCRIPTION

• Large Scale Investments are challenging to value, risk manage, structure and finance.

Typical examples include economic and social infrastructure such as toll roads or hospitals, tunnels, mines and petroleum developments.

• Project Finance is the discipline of crafting bespoke financial structures to meet the needs of stakeholders including equity and debt investors, host governments, suppliers, consumers and affected communities to enable finance for LSIs to be raised.

• This course examines Project Financing’s rationale and methodologies through case studies, readings, lectures and class discussions.

• Four main themes run through the course: Valuing Projects, Structuring Projects, Managing Risk in Projects and Financing Projects.

• A major assignment allows students to develop skills in project evaluation through financial modelling and deal structuring.

• Case studies develop critical thinking and illustrate how the different stakeholders (sponsors, lenders, hosts and community) see value and risk in a transaction.

• Funding, risk structuring and recent transactions are highlighted in class and through practical case studies.

 

SESSION 1

Pre-Course Required Reading:

1. An Overview of Project Finance and Infrastructure Finance – 2014 Update, Esty, Chavich & Sesia, Ref: HBS 9-214-083.

2. Recent Developments In The Australian Project Finance Market - Doyle & Gifford-Moore, King & Wood Mallesons, Australia.

3. Financing Infrastructure: A Spectrum of Country Approaches - Sophia Chong and Emily Poole - Bulletin | September Quarter 2013 – Reserve Bank of Australia.

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

Case: Nava Bharat: Energy Solutions for India

Read and analyse the case and consider whether the coal-fired thermal power plants offer a good investment vehicle for the lenders?

In doing so:

1. Explain the benefits of project financing and the rationale behind the creation of NBEIL as a special purpose vehicle (SPV) of the parent company, NBVL.

2. Comment on the significance of NBEIL’s cash flow waterfall mechanism.

3. Calculate the debt service coverage ratio (DSCR) and internal rate of return (IRR) of the power project, and perform a sensitivity analysis on the key financial parameters (fuel expenses, plant load factor [PLF], interest rate).

4. Evaluate NBEIL’s project by commenting on its managerial, technical, market, environmental, and financial aspects. Is it wise to proceed to syndicate a term loan for the coal-fired power project?

 

SESSION 3

Topics:

• Managing Risky Projects

◦ Avoiding failure – Discussion based on assigned readings

▪ Sydney Light Rail

◦ Due diligence

◦ Equator principals

◦ International projects

Case: Absheron Project: BP’s Production Sharing Agreement in Azerbaijan

Questions for Absheron Project are included in the case.

 

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

Case: BrisConnections (A) – The Vested Interests of an Australian Toll Road

Questions for BrisConnections (A) are included in the case.

 

SESSION 6

Topics:

• Practice & Review

◦ Group presentation

◦ Class quiz

◦ Revision

 

Learning and Teaching Activities

Strategy

The Master of Applied Finance degree adopts a deep teaching and learning strategy, in which students acquire and retain knowledge and also are able to make sense of the issues and concepts and apply them in the “real world”. The degree relies heavily on student engagement and participation by: (a) Continuous learning throughout the term. This is encouraged through a combination of students undertaking prescribed reading throughout the units and/or completion of practice problems, case studies, assignments, class presentations etc and interaction via forums in the unit’s iLearn site; and (b) Assessments, which enable the student to demonstrate his/her understanding of the learning objectives achieved through the continuous learning.

Student Participation

Students participate in this unit by: (a) Attending lectures and participating in class discussion; (b) Before each class, completing the recommended readings and analysing the case studies scheduled, (c) Interacting on the unit’s iLearn site; and (d) Completing all assessment tasks and exams. On average, the unit will require students to complete, for every hour of class time, approximately 3 hours private study.