Project Finance in Excel Modeling (Excel Applied)

Duration: 2, 3 or 4 days

Instructor: Fatih KURAN

Objective: Project finance is a crucial financing technique globally employed in funding large-scale projects such as airports, ports, hospitals, highways, power plants, and more. Every project finance transaction encompasses various risks, including technical, commercial, operational, economic, and financial risks.

This program aims to evaluate the financial modelling of project finance from the perspectives of creditors, contractors, and equity investors (sponsors).

During the program, the participants will learn:

 Accounting and financial concepts used in financial models.

 Essential knowledge and techniques required for modelling large investment projects.

 Best practices in building financial models.

 Analysis of critical project inputs (parameters) that most influence project performance.

 Methods for conducting sensitivity analyses.

 Techniques for performing risk and profitability analyses on financial models from the perspectives of creditors and investors.

 Identifying project parameters critical to financial feasibility and their impact on risk management.

 Concrete examples illustrating the impact of risk management on borrowing capacity and profitability in project finance.

 Use of financial models for pricing and negotiation purposes.

Target Audience:

Professionals working in project financial modelling and analysis in both public and private sectors, financial sector professionals responsible for credit marketing and allocation, bankers, leasing sector employees, investors, project developers, project managers, machinery vendors involved in investment projects, contractor company executives, project consultants, insurance companies, and other stakeholders in project and investment finance.

Content:

1. Overview of Project Finance

• General principles and applications of project finance

2. Structure and Design of Financial Models

• Transferring the project into the model

• Establishing project parameters and indices

• Understanding the economic life of the project

• Determining period length

• The concept of salvage value

• Other critical modeling concepts

3. Structuring the Funding Framework

• Equal Installment Payment Structure

• Equal Principal Payment Structure

• Introduction to Different Payment Plans

4. Developing Sales Volumes

• Sales projections and their modelling

5. Revenue and Cost Projections

• Establishing model assumptions

• Building depreciation schedules

6. Creating a Working Capital Requirements Table

• Calculating operational working capital needs

7. Financial Statements

• Integrating financial statements

• Building balance sheets, income statements, and cash flow statements

• Conducting model accuracy testing

8. Financial Evaluation

• Net Cash Flow

• Free Cash Flow

• Time Value of Money and DCF (Discounted Cash Flow) Modeling

• IRR, NPV, and Payback Period

• Debt Service Coverage Ratio (DSCR), Loan Life Coverage Ratio (LLCR), and Project Life Coverage Ratio (PLCR)

• Establishing the Debt-to-Equity Balance

• Leverage Effect

• Using Goal Seek Functionality

• Calculating Borrowing Capacity

• Risk Management and Its Impact on Profitability

• Profit Maximization

9. Risk Assessment

• Creating risk matrices

• Conducting single-variable and two-variable sensitivity analyses

• Scenario Analysis

10. Summary and Model Finalization

• Creating a financial model control dashboard

• Utilizing graphical functions

*The course involves Excel applications, and participants are required to bring laptops with Excel 2013 or a higher version installed.

4) Debt Sculpting Methodology for Banks in Project Finance (Excel Applied)

Duration: 1 or 2 days

Instructor: Fatih KURAN

Objective: The foundation of project finance lies in funding projects based on their cash flow generation. Structuring loan repayment plans in alignment with cash flow is critical for risk management and profitability. This program provides a practical, Excel-based approach to calculating loan installments tailored to the cash flows generated by the project, specifically from the financier's perspective (banks, leasing companies, etc.).

Target Audience: Professionals involved in project debt pricing and financial modelling, employees in credit marketing, allocation, and operations for project and investment loans, investors, project developers, financial advisors, and other stakeholders in project and investment finance.

Content:

1. Cash Flow Statements and Net Cash Flow (Identifying the Raw Material)

• Understanding the project's cash flow structure

• Calculating net cash flow

2. Introduction to Project Finance

• Fundamentals of project financing

3. Time Value of Money

• Importance of discounting in pricing

4. Introduction to Loan Pricing

• Basic principles and methodologies

5. Equal Installment and Principal Calculations

• Structuring repayment plans based on different approaches

6. Structuring and Structured Finance

• Key concepts and their application

7. Net Present Value (NPV, XNPV) and Internal Rate of Return (IRR, XIRR)

• Calculating and interpreting NPV and IRR

8. Debt Service Coverage Ratio (DSCR), Loan Life Coverage Ratio (LLCR), and Project Life Coverage Ratio (PLCR)

• Definitions and significance in project finance

• Structuring DSCR

• Structuring LLCR and PLCR (Optional for Oil and Mining Projects) *

9. Pricing with Actual Day Counts

• Advanced pricing techniques based on actual day counts

10. Check Mechanisms (Ensuring Accuracy)

• Creating validation mechanisms in Excel models

11. Cash Sweep

• Understanding and applying cash sweep provisions

12. Reserve Accounts

• Importance and usage of reserve accounts in project finance

13. Average Loan Life

• Calculating and interpreting average loan life

*Note: The section on LLCR and PLCR structuring for oil and mining projects is optional and can be excluded based on preferences.

**The course involves Excel applications, and participants are required to bring laptops with Excel 2013 or a higher version installed.