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Module 3 : Financial analysis

Project finance is the strategy to raise long-term debt funding for big projects through a
limited recourse or non-recourse monetary system. It aids in designing a profitable
structure and delimiting the shareholders’ risks through risk diversion to other parties.

Moreover, the project finance includes a brief description of its management, modelling
structure, and meaning.
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Stage

Planning, feasibility,
Pre-Finance
permissions

Finance Loan arrangement

Construction, revenue
Post-Finance
generation, loan repayment
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 1. Debt Amity Business School
It is categorized into private and public debt.
source Of Project Finance Investment banks raise the former and have
cheaper capital costs as debt holders are paid on
a priority basis. At the same time, the
administration raises public debt with more
reasonable capital costs due to being a
government-sponsored program.
2. Equity
Equity financing entails government-issued
debt on the recommendation of an investment
consultant or bank and is relatively more costly
than debt financing. It is developed to reimburse
higher risks presumed by the equity investors
wielding the junior attestation to the project’s
income and assets.
3. Loan
It is categorized into two types, secured and
unsecured loans. In the former, the loan-
securing assets have value as collateral,
implicating the marketability and liquidity. While
the latter depends upon the debtor’s basic
creditworthiness, contrary to the perfected
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Source Provider Risk Repayment Ownership

Sponsors,
Equity High No Yes
investors, govt

Banks, financial
Debt Medium Yes (with interest) No
institutions

Banks (Term
Loan loans, Bridge Low–Medium Yes No
loans)
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Advantages Disadvantages

1. Risk is shared among multiple parties 1. High setup and structuring costs

2. Off-balance sheet financing for sponsors 2. Legally and financially complex

3. Limited recourse to sponsors’ other assets 3. Long time to achieve financial closure

4. Enables financing of large-scale projects 4. High risk for lenders if project fails

5. Entirely dependent on future project cash

5. Attracts external investment
flows

6. Encourages efficient project execution

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High setup and structuring costs?

Many contracts are needed (loan,

📄 Legal Fees construction, operations) — all must be legally
checked.

Experts are hired to create detailed financial

📊 Financial Modeling
models and risk analysis.

Advisors (technical, legal, environmental) are

Consultant & Advisor Fees
paid to ensure project success.

Long negotiations with banks, investors, and

📝 Contract Drafting & Negotiation
government bodies.

Banks charge a fee to structure and approve

🏦 Loan Arrangement Fees
the loan.
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Feature Angel Investors Venture Capitalists (VCs)

Who they are High-net-worth individuals Firms managing pooled funds

Investment Size ₹5 lakh – ₹2 crore (approx.) ₹2 crore – ₹100+ crore

Stage of Investment Early stage / Seed stage Growth stage (Series A, B, and beyond)

Decision Process Informal, personal judgment Formal, committee-based

Risk Tolerance High (willing to invest in unproven ideas) Moderate (prefer some traction)

May take board seats, demand regular

Involvement Often mentor founders personally
reporting

Equity Taken Yes, in exchange for funding Yes, often more significant percentage

Time Horizon Longer, more patient Expect returns within 5–7 years

Typical Role Mentor, advisor, early believer Growth partner, scaling enabler

Higher control, may influence company

Control Level Minimal control, trust-based
direction
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Key Information Investors Look For

1.Business Model and Market Opportunities: Investors need a clear understanding of your
business model and market opportunities. This includes information about market saturation,
market shares, and the overall size and growth potential of the industry. Additionally, they will
want to know about your competitors, their strengths and weaknesses, and how you plan to
differentiate your product or service. Any regulatory requirements or outstanding major lawsuits
that could impact your business should also be addressed.
2.Management Team and Key Employees: Investors want to meet the management team
and recognize key employees. Including short CVs or bios in your PowerPoint presentations can
help investors understand the team's capabilities, track record, and how they plan to lead the
company to success.
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1.Financials and Key Metrics: Your investor PowerPoint presentations should

include key financial data such as revenue, profit margins, working capital, debt
position, and cash flow. Industry-specific key metrics, such as customer
acquisition cost, lifetime value of a customer, and churn rate, should also be
presented. These metrics help investors assess your company's financial
performance and potential.
2.Growth Prospects and Potential Returns: Investors want to see that your
company has strong growth prospects and the potential to generate significant
returns. Be sure to outline your growth plans and how you intend to achieve them
in your investor PowerPoint presentations.