Hermes Healthcare Advisors

Structured Project Finance

The Art of Structured Project Finance.

Hermes Healthcare Advisors provides its clients with the integration of a carefully engineered project finance model, coupled with innovative and proven
structured financing techniques.

Project Finance, on a standalone basis, is a method of finance based on the merits and economics of a given project, rather than the rating and credit
profile the project's sponsor.

Structured Finance, in turn, is a form of transaction design, generally employing debt nstruments with principal and interest payments governed by cash flow generated by underlying project assets.

Overall this form of finance allows for wider possibilities than other forms of financing, which are normally limited to companies with acceptable credit risk, or conditional upon onerous security, and gives access to financing on "better terms”. The attractiveness of Structured Project Finance is the ability to fund projects off balance sheet, with limited or no recourse to the hospital (or ‘project sponsor’).

It is significant to note that this form of off balance sheet funding allows the hospital to achieve better financial ratios, which generally allows access to capital markets that may otherwise be unavailable. It is an excellent way for a company that is emerging from a rough period to get the finance and operating capital it needs to get back on its feet and begin to grow once again. Additionally it can help you improve your financial rations and allow you to become bankable or become rated again.

Structured Project finance is finance for a particular project, hospitals, which is repaid from the cash-flow of that project. Structured Project finance is different from traditional forms of financing because the financier principally looks to the assets and revenue of the project in order to secure and service the loan.

In contrast to an ordinary borrowing situation, in a project financing the financier usually has little or no recourse to the non-project assets of the borrower or the sponsors of the project. In this situation, the credit risk associated with the borrower is not as important as in an ordinary loan transaction; what is most important is the identification, analysis, allocation and management of every risk associated with the project.


- No recourse or limited recourse project financing
- For poor credits, rated or non rated
- Increase credit profile
- Lower interest costs
- Increase balance sheet strength
- Off Balance sheet
- Debt repaid from its cash-flow
Structured Project Finance requires a knowledge-base to:
- Prepare the financial plan.
- Assess the risks, design the financing mix, and raise the funds.
- Understand the cogent analysis of why some project financing plans have succeeded or fail.
- Identify, analyse, allocate and manage every risk associated with the project.
- Design contractual arrangements to support project financing.
- Resolve issues concerning host government legislative provisions.
- Establish public/private infrastructure partnerships, public/private financing structures.
- Understand credit requirements of lenders.
- Determine the project's borrowing capacity.
- Prepare cash flow projections.
- Measure expected rates of return; tax and accounting considerations.
- Validate the project's feasibility using specific analytical techniques.
© 2011 Hermes Capital Partners, LLC All rights reserved.

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