Tailored packages: Project finance deals can be designed with a specific project in mind.
Risk management: Off-balance sheet project finance isolates the risks associated with a project, so a sponsors financial exposure is limited.
Greater opportunities: Project finance can bring to life large-scale projects that traditional forms of credit cannot support.
Extra clarity: Using a special purpose vehicle (SPV) to manage a project helps provide greater transparency and control.
Complexity adds costs: As project finance deals tend to be highly complex, they can be more challenging and expensive to set up.
Long-term uncertainty: The long-term nature of project finance makes it more sensitive to changes in market conditions, trends, new technologies.
Risk assessments crucial: Ensuring that the risks associated with the project are understood and correctly allocated is crucial. An effective due diligence process can be costly and time-consuming.
ADVANTAGES
RISKS