Conventional Infrastructure Financing
A Conventional Infrastructure Financing Company is a financial institution or firm that specializes in providing funding for the development, maintenance, and expansion of infrastructure projects using traditional financing methods. These companies typically focus on large-scale projects like roads, bridges, airports, railways, utilities, and other public or private infrastructure systems.
​
In conventional infrastructure financing, the funding is generally provided through the following methods:
-
Debt Financing: This includes loans, bonds, or other debt instruments that are issued to raise capital for infrastructure projects. Debt financing is often used because it allows infrastructure projects to be funded without diluting ownership.
-
Equity Financing: In some cases, infrastructure financing companies might invest equity capital in a project, either alone or in partnership with other investors, to fund part of the capital needs.
-
Project Financing: This method is commonly used in infrastructure projects, where financing is secured against the future cash flows generated by the project itself, rather than the balance sheets of the investors. It is often employed for large-scale infrastructure projects with long-term revenue streams, like toll roads or utilities.
-
Government Funding: Infrastructure projects are often publicly funded, and conventional infrastructure financing companies may act as intermediaries to facilitate government financing for public projects, sometimes through public-private partnerships (PPPs).
-
Bank Loans and Syndicated Financing: Conventional infrastructure financing companies may also provide syndicated loans, where multiple financial institutions come together to pool their resources and fund the project.
These companies often work closely with governmental agencies, developers, and other stakeholders to structure financing deals that are suitable for large infrastructure projects, balancing the risk between the parties involved while ensuring that the financing terms are favorable for the project's success.
Conventional infrastructure financing is generally more traditional compared to other methods like private equity or venture capital, focusing on securing stable and predictable returns over time.