Is Project Finance interesting?
Ok folks, let's hear it. People say project finance is for those who can't make it in corporate finance. Do you think there's any truth to this? For those who have tried out project finance do you find it interesting and why?
I work in infra PE, sometimes on PF/greenfield projects. For sure the modelling work in very challenging and formulas are really long but i find the structuring part super interesting.
Moreover, PF / Infra is really long term oriented and very in line with what we need today. I feel lile I'm working in front office finance but still contributing to our society (financing clean energy projects, social housing, etc.) vs. pure LBOs and agressive investing.
Project finance is really interesting, although it's a very broad term and energy is only a small part of PF.
Just signed up for this website after creeping the last x years.
No one gets into PF as a result of being a CF reject. In fact, the skillsets you learn in PF are significantly more applicable than any product or coverage group in IBD (M&A included). Some of the brightest folks and most technically-advanced modelers I have met have been in PF teams. Me personally, I have been an Associate now for three years working in a PF infra team. One thing I can say is the modeling skills you develop are insane. Infra isn't a group where you build a simple LBO, M&A or DCF model in <4 hrs. These models take weeks due to the complexity and constant sensitivities (sometimes 100+) to strain cashflow in the CFW. Current model I am working on has 40 macros so far and thousands of thousands or rows for calcs. Roughly 37 tabs so far.
Most PF bankers are advanced VBA coders as well. I wouldn't consider myself an expert, but over the last three years I have developed significant macro-writing skills that are essential to be successful in PF/infra. (IF YOU WANT TO BREAK INTO PF LEARNING VBA IS KEY FOR CIRCUIT BREAKERS!!!) Pay is equal if not better in some groups (largely dependent on deal flow from what I've seen). We are a very heavy credit-related team as you can imagine. Also, PF is essentially LevFin but on steroids. We structure various tranches of debt with different repayment profiles based on the projected CFADS for the project.
Another thing - I have yet to meet one PF banker who is an absolute dick. They are some of the most nicest people in the industry. If I'm up until 2/3am building models, our MD's are up working with us. It's not the usual BS hierarchy.
Hope this shines some light on PF. A lot of people have this image of Project Finance as a group of joksters with no prestige but I guarantee you... bring any junior PF banker vs anyone else in a product/industry group and the modeling skills and macro ability of the PF guy (or girl) will make the other candidate look like an absolute joke. Also, if you can't tell... very modeling heavy...
Here's my opinion: Having had done Private Equity, Equity Research and Project Finances as internships. Now I found Project Finance the most interesting. Ill be getting a full time offer in project finance advisory.
The kind of work in project finance can be very interesting due to the fact that you learn exactly how each asset works. The cost drivers, the operating model, and more contractual arrangements.
Having to know how to quickly pull up an empty spreadsheet and model a water disiliation plan, a hydrogen electrolysis plant, or gold mining plant, I find much more interesting in knowing how to build an LBO model where in most cases the revenue projections are not very realistic and the deleverage profile is never really is what was initially planned and most LBO models are exactly the same.
You feel smart, adept and technical within project finance which i found more interesting.
You also have the ability to understand niche areas of capital markets, as you know which infra sectors to put your savings in.
I found Private Equity to be less technical and more marketing focused. I found equity research very fast paced, and most of the time you find your self reading and writing rather than building technical skills.
Yes Project Finances is very interesting. And with lots of dry powder in this asset class, i see it becoming the next big thing on wall street.