Infrastructure PE Modeling
Would anyone be able to shed some light on the types of models involved in infrastructure PE? I assume it would be LBOs for corporate infra targets but what types of models would be used for the actual assets?
This is a dumb question. Like anything else, you model the specific asset so it varies. Then you value it
what an idiotic comment, "just value it bro"
if you're an equity investor in an solar development project, it's not just a simple DCF. If you're investing at the company vs. the asset/portfolio level (say off-balance sheet) it's going to be different modeling.
Could be massive models.
It's essentially an LBO where your gearing/leverage is likely >70% because cash flow is usually partially guaranteed by government subsidies.
I did infra projects for NA and LatAm countries. Typically you have MULTIPLE tranches of debt. If it's emerging markets, you have both USD and local currency debt tranches and you model everything in both currency units, which is a fucking nightmare.
Debt paydown is another pain in the ASS. Besides your equity and revolver, corporate, and municipal debt, you also have reserve accounts such as a debt service reserve account that gets drawn under a particular circumstance. You also have maintenance reserve account that is used to maintain assets.
You build out the construction and operation tabs of an asset. You have different financing for construction and operations. You build out an operating model based on your operational stage financing.
You might also have a shareholder loan where you lend upwards, from OpCo to HoldCo level so equity investors get cash and boost their return.
You also need to know some VBA because in project finance models you will get circular references a lot during debt paydown and that is unacceptable when you have 5 tranches of debt.
I did infra finance advisory for 1 year, 2 years ago, and that's all I got. It was non-IB and a lean team, but plenty of analysts go to infra PE funds directly.
There are plenty of snobbish PEs who only take prestigious bankers (almost all of them), but in the world of infra it IS different.
Very helpful thank you
project finance is a much more valuable skillset than investment banking in terms of infrastructure PE (at least it seems to me)
I would agree but not everyone sees it that way
Pretty much sums up infra models.
That's very helpful. Thank you. Are you aware of any prep providers, who would provide such case studies for such models?
Corality/Mazars Infrastructure Finance. They also have a paid course, a bit pricey but Mazars infra advisory is considered top-notch in the world of infra. Your money will be well spent.
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