FACULTY OF ENGINEERING TECHNOLOGY ENGINEERING ECONOMY BPK 30902 INDIVIDUAL ASSIGNMENT
TITLE
: PROJECT FINANCING
NAME OF LECTURER
: DR MAS RAHAYU RAHAYU BINTI JALIL
COURSE/ SECTION
: 4 BNA/ 11
STUDENTS NAME
MATRIC NU
MUHAMAD SY SYAHRIL SY SYUHADA RO ROSLI
AN13000!
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Table Of Content
Title page
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Table of content
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6.1 : INTRODUCTION TO PROJECT FINANCING
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6. : T!PE" OF PROJECT FINANCING
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6.$ : DE%T FINANCING
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6.# : E'UIT! FINANCING
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REFERENCE"
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"#1 INTRODUCTION TO PROJECT FINANCING
6.1.1 DEFINITION OF PROJECT AND PROJECT FINANCING Project is a temporary enea!o"r "nerta#en to create a "ni$"e pro"ct% ser!ice or res"&t. T'e temporary nat"re o( projects inicates t'at a project 'as a e)nite *e+innin+ an en. T'e en is reac'e ,'en t'e project-s o*jecti!es 'a!e *een ac'ie!e or ,'en t'e project is terminate *eca"se its o*jecti!es ,i&& not or cannot *e met% or ,'en t'e nee (or t'e project is terminate *eca"se its o*jecti!es ,i&& not or cannot *e met% or ,'en t'e nee (or t'e project no &on+er eists. A project may a&so *e terminate i( t'e c&ient /c"stomer% sponsor or c'ampion0 ,is'es to terminate t'e project. Project )nancin+ can *e e)ne as a (orm o( e*t or e$"ity str"ct"re t'at re&ies primari&y on t'e project-s cas' o, (or repayment% ,it' t'e project-s assets% ri+'ts an interests 'e& as seconary sec"rity or co&&atera&.
6.1.2 ADANTAGE3 OF PROJECT FINANCING T'e a!anta+es o( project )nancin+ are4 i. ii. iii. i!.
!i. !ii.
E&iminate or re"ce t'e &ener-s reco"rse to t'e sponsors. Permit an o5*a&ance s'eet treatment o( t'e e*t )nancin+. 7aimi8e t'e &e!era+e o( a project. A!oi any ne+ati!e impact o( a project on t'e creit stanin+ o( t'e sponsors. !. O*tain *etter )nancia& conitions ,'en t'e creit ris# o( t'e project is *etter t'an t'e creit stanin+ o( t'e sponsors. A&&o, t'e &eners to appraise t'e project on a se+re+ate an stan a&one *asis. O*tain a *etter ta treatment (or t'e *ene)t o( t'e project% t'e sponsors or *ot'.
6.1.9 DI3ADANTAGE3 OF PROJECT FINANCING T'e project )nancin+ systems 'a!e &ac# in se!era& parts ,'ic' are4 O(ten ta#es &on+er to str"ct"re t'an e$"i!a&ent si8e corporate )nance. :i+'er transaction costs "e to creation o( an inepenent entity. Project e*t is s"*stantia&&y more epensi!e "e to its nonreco"rse nat"re. Etensi!e contractin+ restricts mana+eria& ecision ma#in+. !. Project )nance re$"ires +reater isc&os"re o( proprietary in(ormation an strate+ic ea&s.
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6.2 T;PE3 OF PROJECT FINANCING In +enera& t'ere are t,o types o( )nancin+ met'os% ,'ic' are e$"ity )nance an e*t )nance. Eac' o( cate+ories inc&"es !ariety o( approac'es ,it' t'eir re&ate a!anta+es% isa!anta+es or ris# an t'eir possi*&e (oreseen so&"tions. T'ere are many types o( project )nancin+ met'o ,'ic' amon+ t'em are4 3toc#
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6.9 DE
6.> EIT; FINANCING E$"ity )nancin+ is t'e process o( raisin+ capita& t'ro"+' t'e sa&e o( s'ares in an enterprise. E$"ity )nancin+ essentia&&y re(ers to t'e sa&e o( an o,ners'ip interest to raise ("ns (or *"siness p"rposes. E$"ity )nancin+ spans a ,ie ran+e o( acti!ities in sca&e an scope% (rom a (e, t'o"san o&&ars raise *y an entreprene"r (rom (riens an (ami&y% to +iant initia& p"*&ic o5erin+s /IPOs0 r"nnin+ into t'e *i&&ions *y 'o"se'o& names s"c' as Goo+&e an Face*oo#. 'i&e t'e term is +enera&&y associate ,it' )nancin+s *y p"*&ic companies &iste on an ec'an+e% it inc&"es )nancin+s *y pri!ate companies as ,e&&. E$"ity )nancin+ is istinct (rom e*t )nancin+% ,'ic' re(ers to ("ns *orro,e *y a *"siness. E$"ity )nancin+ in!o&!es not j"st t'e sa&e o( common e$"ity% *"t a&so t'e sa&e o( ot'er e$"ity or $"asie$"ity instr"ments s"c' as pre(erre stoc#% con!erti*&e pre(erre stoc# an e$"ity "nits t'at inc&"e common s'ares an ,arrants. A start"p t'at +ro,s into a s"ccess("& company ,i&& 'a!e se!era& ro"ns o( e$"ity )nancin+ as it e!o&!es. 3ince a start"p typica&&y attracts i5erent types o( in!estors at !ario"s sta+es o( its e!o&"tion% it may "se i5erent e$"ity instr"ments (or its )nancin+ nees. T'e e$"ity)nancin+ process is +o!erne *y re+"&ation impose *y a &oca& or nationa& sec"rities a"t'ority in most j"risictions. 3"c' re+"&ation is primari&y esi+ne to protect t'e in!estin+ p"*&ic (rom "nscr"p"&o"s operators ,'o may raise ("ns (rom "ns"spectin+ in!estors an isappear ,it' t'e )nancin+ procees. An e$"ity )nancin+ is t'ere(ore +enera&&y accompanie *y an o5erin+ memoran"m or prospect"s% ,'ic' contains a +reat ea& o( in(ormation t'at s'o"& 'e&p t'e in!estor ma#e an in(orme ecision a*o"t t'e merits o( t'e )nancin+. 3"c' in(ormation inc&"es t'e companys acti!ities% etai&s on its oBcers an irectors% "se o( )nancin+ procees% ris# (actors% )nancia& statements an so on. In!estor appetite (or e$"ity )nancin+s epens si+ni)cant&y on t'e state o( )nancia& mar#ets in +enera& an e$"ity mar#ets in partic"&ar. 'i&e a steay pace o( e$"ity )nancin+s is seen as a si+n o( in!estor con)ence% a torrent o( )nancin+s may inicate ecessi!e optimism an a &oomin+ mar#et top.
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REFERENCE34 1. 7a'moo Os#ooei 7
. INE3TOPEDIA. De*t Financin+. Retrie!e (rom 'ttp4??,,,.in!estopeia.com?terms??e*t)nancin+.asp
