Infrastructure Loan Financing
Infrastructure project financing is something relatively new to the world of private lending. Historically, public infrastructure projects were large and typically funded by the government through fundraising channels such as bond measures. Later, seeing the need for more options, banks entered and have become the traditional financing provider for commercial infrastructure loans. In recent years private sources of capital have quietly been entering the commercial marketplace. The migration toward private lenders has been slow for a number of reasons, including capital intensity and a long asset life. It takes a specialized team to understand the unique requirements and characteristics of infrastructure loans, this coupled with the previous issues has prevented many lenders from entering the market. Our team is well versed in the unique challenges faced when seeking large commercial project financing. We can provide creative solutions that include both private equity financing and debt financing or a combination financing package.
The difficulties do not end there, as these tend to be the most complex projects we see. Each commercial infrastructure project is very unique and little specific information carries over from one project to the next. In order to spread the risk across the numerous entities involved, complex legal agreements are required. Commercial infrastructure financing often appears clouded with the depth of legal arrangements and unique nature causing a lack of transparency. This concerns many investors who are used to more straightforward, fully transparent projects in other sectors.
We are not deterred by any of these issues, as we look beyond the troubles above. By approaching infrastructure lending as another form of commercial project finance, it allows us to bring our experience and proven methods. This technique allows us to simplify an already complex financing project by adding structure and clear expectations. Our team understands the risks involved, and how those are outweighed by benefits. Once infrastructure projects pass the high costs & risk in the pre-development and construction phases, entering the operational phase they generally become very stable and profitable. Beyond their strong stability and profit potential, financing commercial infrastructure projects is invaluable to the communities the projects serve, providing resources such as reliable clean drinking water. For these reasons, we appreciate any opportunity to work on infrastructure projects where private lending is required.
