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Financial Analytics: Science and Experience
 

Promising tools of project finance: a contemporary view

Vol. 9, Iss. 20, MAY 2016

PDF  Article PDF Version

Received: 11 April 2016

Received in revised form: 20 April 2016

Accepted: 28 April 2016

Available online: 29 May 2016

Subject Heading: FINANCIAL INSTRUMENTS

JEL Classification: E44, G20, G21, L10, O16

Pages: 18-32

Ezangina I.A. Volgograd State Technical University, Volgograd, Russian Federation
ezanginaia@rambler.ru

Khmurova T.V. Volgograd State Technical University, Volgograd, Russian Federation
tanya.kriushina@yandex.ru

Importance Currently, business community faces needs for higher finance of investment projects, which is of big social and infrastructure significance for the national economy. In this respect, it is necessary to identify, systematize and examine some factors, which impact investment project financing processes in a different way, and analyze the existing financial tools.
Objectives The research comprehensively reviews the substance of project finance, its strengths and weaknesses, and evaluates how relevant tools for its implementation are integrated in the Russian stock market, and whether they bring any opportunities.
Methods The research draws upon general scientific methods and techniques, i.e. methods of scientific abstraction, analogy, analysis, synthesis and comparison, systems and structural approach to analyzing the subject matter of the research.
Results We provide the rationale for diversifying product mix of financial institutions and devising new forms of project finance, which would allow investors to grasp additional levers and steer credit risks, while companies acquire necessary resources to implement innovative and investment projects.
Conclusions and Relevance We identified the concept of project finance, specified what it meant in the current circumstances as the source for return on investment was separated from financial results of project initiators’ operations. We also reveal the substance of syndicated loan, mezzanine and bridge finance, and determined them as promising tools for project implementation purposes. The article indicates that multiple sources of finance are typical of the current business practices and systematizes issues of the Russian project finance institutions, outlining its further development paths.

Keywords: project finance, bank loan, syndicated loan, mezzanine financing, bridge financing

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