Project Finance can be broadly defined as financing of long-term projects such as infrastructure, power & plant, and other industrial projects. Today the role of finance professionals is mounting beyond the traditional accounting and reporting functions, they are taking the role of leadership for promoting efficiency and improving performance of an organization. And such role is of Project Finance Professionals who stands out in the fields of finance by advising, analyzing and financing the various industrial projects. The project finance jobs range from an analyst to the director of the project but all these jobs involve the long-term financing of infrastructure projects or industrial projects.
Project Finance Jobs will be interesting to those who enjoys traveling, advising clients for the financial decisions, analyzing and projecting the financial statements. Through this article, I aim to provide you the brief details about the project finance jobs. And how does it differ from the various other jobs of finance. In this article I am going to cover the following points:
- What is Project Finance
- Main Career Paths in Project Finance Jobs
- Jobs in Project Finance
- Skills Required for Project Finance Jobs
- Responsibilities in Project Finance Jobs
- Salaries of Project Finance Professionals
- Companies hiring Project Finance Professionals
What is Project Finance?
Now many of you must have heard about Project Finance Companies through newspapers, business journals etc. but might not be pretty sure what exactly is Project Finance. So let me guide you a Project Finance refers to a long-term method of financing or you can say a long process of lending for the infrastructure projects or industrial projects by means of different sources.
In general terms if we will understand it is a loan structure that depends mainly on the projected cash flow for the repayment rather than the investor’s own finances. It has been found that Project Finance is mostly attractive to the private sector companies’ comparison to public sector companies because they can fund major projects off balance sheet.
Let us have a look over the various types of Projects for which Project Finance is commonly used:
Infrastructure Projects such as government buildings, construction of roads and bridges, transport systems.
- Oil & Gas Projects
- Liquefied Natural Gas Development Projects.
- Shipping Corporation
So from the above examples it is clear that Project Financing is usually required for the huge investments projects and especially this a preferred model of financing in many developing countries.
Basic Elements of Project Financing
Main Career Paths in Project Finance Jobs
There are two main streams in project finance jobs i.e. advisory and lending. Project Finance Group basically advises clients and/or lends funds for the debt used in huge investments.
The main task of a Project Finance Professional or an Individual is to advise the clients for the funds used in the huge investment. Below are the activities conducted by Project Finance Advisor:
- If you are being appointed in a Project Finance Group as an Advisor so your main task will be to handle the clients.
- If you will see the basic element for every client is to gather the funding/financial goals for their project, so as an advisor you will be guiding the clients to how to make an arrangement for collecting the funds by providing them debt funding sources and prioritizing the important element.
- As for clients the ideal situation is to get maximized debt period, maximized debt load, quick financial close and low debt pricing. So as a Project Finance Advisor your duty will be to make an intensive modeling of the client’s project, carrying out the due diligence of projects including pre-bid advisory, estimating the cash flows of the project, collecting marketing materials such as information memorandum and preparing structure of the funding to meet specific requirement of the project.
- After preparing and finalizing the deal structure, as an advisor you will be reaching out the banking markets or financial institutions for raising the required finance for the client’s project.
Debt Syndication refers to the selling of loans to the other banks or financial institutions. Below mentioned are the activities of a debt syndication team:
- As the project financing is basically required for the large size of the project, so the multiple banks finds it ideal to fund together for a single project.
- If you are working under project syndication or debt syndication team of the main bank, you will be playing a role of an intermediate between the client and with the other financial institutions.
- As an intermediate you will be finalizing the structure and get loan sanctions from all the leading agencies who are involved in the transactions.
- Under debt syndication team you will be also required to interact with several banking and financial institutions and negotiate the terms of loan sanction to best suit the client requirements.
Jobs in Project Finance
There are numerous jobs under project finance which generally ranges from an analyst to director position of project and infrastructure finance. These all jobs involve infrastructure financing and various industrial projects financing over the long period of time. A project finance jobs wants that professional in this field who plans long term cash flow rather than just analyzing and balancing the income statement and balance sheets of those corporates which are financing the projects. The following are the description of different positions in Project Finance:
Directors are the one who visons the failure or success of the project before preparing the financial structure of the project. In order to become a director of a Project Finance Company the following skills you need to possess:
- You should have an experience of 10 – 12 years working with financial statements, financial analysis and debt flow
- You need to have an analytical mind to understand the varied range of factors which may influence the success of a project.
- You should also have an experience of marketing research and sales in order to understand the factors that can affect the projects earnings.
- You will require to possess a sharpened leadership skill in order to lead a team of project finance.
Project Finance Managers are the one who is capable enough to lead a team. To work as a manager in the project finance team, you will require to possess the following skills:
- You need to have an experience of 3-5 years working as an analyst, making intensive modeling structure of a company.
- You will require to undertake all the necessary activities i.e. collecting the information, preparing the projection model, finalizing the structure etc. for meeting the funding requirements financial or funding requirements of the clients.
- You will require to coordinate with banks, financial institutions, private equity funds, rating agencies and other participants in the financial communal in order to ensure the timely accessibility of finance for project. And also coordinate with the finance providers on due diligence, term sheet negotiations and documentation.
- You will work with project development team to identify, analyze and execute the most optimum financing solutions for projects.
Analyst main job is to assist its seniors and prepare the projected reports. If you are planning to get a job as an analyst in Project Finance Company, you require to possess:
- You need to have an MBA degree in Finance from the top management institutions.
- Your job will be to assist the directors and setting up various contracts.
- As an analyst you should know to make reports on projected earning, risk and cash flow.
- You need to possess management skills to manage teams, client meetings and contract negotiations.
- You are required to possess the skills of effective communication, resource management and negotiation skills as the responsibility level, scope, complexity will differ according to the nature of the project.
Skills Required for Project Finance Jobs
- Between three to five years of professional experience in infrastructure project finance, learned primarily within project finance bank or a corporate house focused on project development/financing.
- Should know how to screen new projects, aware of defining project description & scope and conducting feasibility studies to determine the financial viability of new ventures projecting cash flow & growth opportunities
- Should know to Prepare, Monitor and ensure cash flows, fund flows, Profitability Statements, IRRs, Payback periods, DSCRs, projected profitability and other financial parameters / reports to analyze inflow / outflow of funds and profits/surplus resulting thereof.
- Strong knowledge of financial modeling, capable of building from scratch sophisticated “project finance” financial models.
- Coordination with Banks, financial Institutions and consultants to arrange syndication of and raise funds from various Financial institutions / Banks / lease finance companies
- Knowledge of project finance documentation and experience of handling financial closing work either as project developer or as lender.
- Knows how to compile and prepare cost and performance reports as per cost accounting records rule (CARR), cost benefit analysis and critical analysis of cost reports; recommending necessary corrective actions; and also conducting financial analysis of similar companies and / or Projects for benchmarking Ratios and performance tracking.
- Should be a Chartered Accountant (CA) / Certified Public Accountant (CPA) / MBA (Finance) and needs to have a knowledge on the areas of project proposals, project finance management all the financial accountabilities related Multiple Projects
Responsibilities in Project Finance Jobs
- To make inclusive financial models for several projects to deliver cash flow forecast, scenario analysis, risk assessment and return analysis.
- Individuals has to work closely with the project development team to identify, analyze and execute the most optimum financing solution for projects which includes debt & equity.
- Individuals have to coordinate the drawdown/repayment formalities for debt facilities and to monitor compliance with financing conditions and obligations.
- Even individuals have to coordinate with finance providers on due diligence, term sheet negotiations and documentation.
- Coordinate with banks, financial institutions and consultants to arrange syndication of and raise funds from various financial institutions/banks/lease finance companies.
- To evaluate capital investment proposals and calculation of project/dividend IRR’s, DSCR’s, and Sensitivity Analysis etc.
- To compile and prepare cost and performance reports as per cost accounting records rule (CARR), cost benefit analysis and critical analysis of cost reports; recommending necessary corrective actions.
- Investigate into historical dealings to categorize pricing, debt levels, trends and greatest practice. Also has to conduct financial analysis of similar companies and/or projects for benchmarking ratios and performance tracking.
Salaries of Project Finance Professionals
Project Finance Professionals are still in high demand, the salaries of project finance professionals differ as per the position, role and years of experience but still project finance jobs are being highly paid up jobs compared to other jobs of finance. The following table will give you the details of salaries of project finance professionals:
|Role / Experience||Basic Salary Range ($)||Bonus (%’age)|
|Analyst 1-3 years||40,000 – 65,000||30-70%|
|Managers 3-5 years||60,000 – 90,000||30-100%|
|Vice President||80,000 – 130,000||50-120%|
|Director||120,000 – 220,000||50-200%|
|Managing Director||150,000 – 350,000||100-300%|
The survey found that at large investment banks some senior project finance professionals earn basic salaries of $200,000. Many of people had attained bonuses getting seven figures. And also in energy sector project finance directors earn a median salary of $100,000, with a bonus of typically 100%. Even at assistant director level, salaries are $70,000 and average bonus of 80%. In the graph below you can see the range of salary offered to Project Finance Manager.
Companies hiring Project Finance Professionals
There are many companies who hire project finance professionals as this field is still in great demand today. Various infrastructure companies, energy and power companies, large investment banks, steel companies, oil & gas companies etc. who requires comparatively huge amount of funds for their projects compared to other sectors or companies are looking forward for project finance professionals.
Following is the list of companies who are looking for project finance professionals and they are:
- China State Construction & Engineering
- Chevron Corporation
- Saudi Aramco
- Royal Dutch Shell
- Matson Navigation Company
- Crowley Maritime Corporation
- Royal Bam Group
- Jacobs Engineering
- Goldman Sachs
- Larsen & Toubro
- Marathon Petroleum Corporation
- Reliance Industries Ltd.
- Exelon Corporation
- Anglo American Platinum
The above listed are few companies which hires project finance professionals there are many more as such companies who are looking for project finance professionals with the required skills and knowledge.