Energy /Infra PF case study

For a 2-hour infrastructure/project finance (PF) case study, here’s a structured approach based on the most helpful WSO content:

1. Understand the Prompt (First 10-15 Minutes)

• Carefully read the case study instructions and assumptions provided.
• Identify the key deliverables: Are you building a model, providing a valuation, or making an investment recommendation?
• Highlight critical inputs like revenue drivers, cost assumptions, financing structure, and return requirements.

2. Focus on the Model (Next 60-75 Minutes)

• Simplify the Model: Given the time constraint, avoid overcomplicating. Focus on building a straightforward model:
  • Revenue Drivers → Top-Line → Operating Costs → EBITDA.
  • Incorporate financing assumptions (e.g., debt, equity, interest rates) to calculate post-tax levered returns.
• Key Outputs: Ensure your model calculates metrics like IRR, DSCR (Debt Service Coverage Ratio), and equity returns.
• Sensitivity Analysis: Build in basic functionality to test key variables (e.g., revenue growth, cost overruns, or interest rate changes).

3. Prepare a Quick Write-Up or Presentation (Last 30-40 Minutes)

• Investment Thesis: Summarize whether the project is viable based on your model outputs.
• Key Risks: Highlight potential risks (e.g., construction delays, regulatory issues, or financing challenges).
• Next Steps: Suggest areas for further due diligence or additional analysis.

4. Tips for Success

• Practice: If you’re not familiar with PF, practice building a simple infrastructure model beforehand. Resources like Ed Bodmer’s project finance exercises (https://edbodmer.com/project-finance-exercises/) are highly recommended.
• Focus on Basics: Don’t get bogged down in details. The goal is to demonstrate your ability to think critically and structure a coherent analysis under time pressure.
• Be Concise: If a presentation is required, keep it to 2-3 slides with clear visuals and bullet points.

5. Common Case Study Types

• Construction Stage Model (Type 2A): Model returns for a partially/fully contracted asset, sculpting back-leverage financing to meet return requirements.
• Operating Asset Model (Type 2B): Focus on valuing an existing asset with provided assumptions.
• Public Company Valuation (Type 2C): Use DCF or public comps to value a broader operating platform.

By following this structure, you’ll maximize your efficiency and showcase your ability to handle PF-related challenges effectively. Good luck!

Sources: Interviewing For Infrastructure Investment Roles, Interviewing For Infrastructure Investment Roles, How would you approach a 4 hour case study?