Investments in infrastructure works, sanitation, construction of power generation parks and public concessions in various sectors, usually demand a greater allocation of resources than the potential for traditional capture of the equity of the company interested in the project. At that moment, the entrepreneur can opt for a structured source of leverage in the Project Finance modality.
Debt financing of projects is a way to allocate large volumes of resources to long-term initiatives. Project Finance is especially attractive for financial structuring that aims to promote greater leverage in the early stages of investment, separating project risks from shareholder risks. To this end, it is possible to use third-party capital through financial engineering that contractually supports the creditor with the cash flows to be generated by the initiative and also serves as a guarantee for the receivables and assets linked to that same project.
According to monitoring by ANBIMA, development banks are the main source of financing for this modality in Brazil. In 2020, BNB and BNDES together represented 80% of financing. However, despite the increase in public investment in these initiatives, the capital market remains an important funding alternative for companies seeking funds to start executing long-term projects.
