Guide

Project Finance

Question and Answer Guide

Please read all the information given here carefully as it should answer any questions you may have about our project finance service including questions concerning project eligibility and application procedures.

Please click on the link below to take you directly to the appropriate section or scroll down to read the entire page.

PROJECT DOCUMENTATION

How important is project documentation?

High quality project documentation is absolutely essential for the success of your project. Globally, there are more projects seeking finance than there is international finance available to fund them. Consequently, in this competitive financial environment, investors, who are busy people, do not waste time on projects with inadequately prepared documentation. Lenders have to be absolutely convinced that your project is a solid investment before they will invest in it. Your project documentation is the primary means of achieving this.

What documentation do I need to prepare my project for financing?

Each project is unique but each project requires documentation produced to international investment standards typically including a market feasibility study with competition analysis; a financial feasibility study modeled on cash flow with detailed departmental costs, profit center projections, a ten year forecast, profit and loss projections, a risk analysis, hard and soft costs and detailed exit year calculations; a business plan with professional management structure and non-compete agreements; a development budget with a detailed statement of all expenditure to be incurred prior to the project opening including contingency provisions; an initial outline architectural master plan; a final architectural master plan and a private placement memorandum with an executive summary of the feasibility studies, due diligence search findings, architectural concepts and profit and loss calculations. Additionally, an environmental impact assessment and a social impact assessment, including a defense anticipating possible objections from the public, local or government authorities or other organizations may be required. Each project also typically requires the appropriate local and government authority permits to allow the construction of the project.

Who should produce the documentation for my project?

International investors are only interested in a ruthlessly objective view of your project so it is essential that your project documentation is independently prepared by internationally experienced analysts with a proven track record. You too should only be interested in an independent and objective view of your project, if your project does not stand up to independent objective scrutiny you should consider whether it is a good use of your time searching for investment from the international project finance market as such a search may well prove futile.

Can you produce the documentation for my project?

Yes. We are happy to produce your project documentation as this gives us control over its quality. We have a very highly experienced team which produces comprehensive market and financial feasibility studies, business plans, architectural plans, environmental surveys and all aspects of project documentation. We produce the documentation for most, but not all, of the projects which we approve for financing. To obtain our finance provision fees we need your project to attract finance so we typically carry out these works at cost.

Do you insist on producing the documentation for my project?

No. You are completely free to engage a third party to produce your project documentation but it must be produced to international investment standards. We do not provide finance for projects which have inadequate documentation. If your project documentation is produced by a third party it will be necessary for us to analyze and approve it before we can approve your project for financing.


I have not yet prepared my project documentation, should I engage internationally experienced analysts to write it now or should I contact you first?

You should contact us first. Please fully complete our online project finance enquiry form indicating that you have not yet prepared your project documentation.

My project documentation was prepared by internationally experienced analysts, will you approve it?

Possibly. We will have to perform our own independent analysis of your documentation to determine whether it meets the appropriate international standards. Since this is a time-consuming process we reserve the right to charge for our research and analysis time.

What mistakes are made by managers who have never developed a significant project before?

A common error made by managers who have not developed a significant project is to employ accountants or others who have never developed a significant project, to prepare their project documentation. This almost invariably results in documentation which international investors find completely unconvincing.

My project documentation was prepared by an accountant, will this be adequate for raising project finance?

No, it is most unlikely. Your project documentation must be of sufficient quality to convince experienced international investors to invest in your project. If the people who prepared your project documentation do not have a proven and successful international track record of producing documentation for your type and scale of project it is very unlikely that your documentation will attract the attention of serious professional investors.

My project documentation is inadequate by international project finance investment standards, will you consider approving my project for financing?

No. We only approve projects which have international standard documentation prepared by experienced international analysts. You must arrange for the production of documentation of this quality either through us or through a third party acceptable to us.

Why do you only approve projects with high quality documentation?

We usually have to provide lenders with financial guarantees for the first three years of a project’s operation. If your project fails to meet the financial targets stated in the project documentation we forfeit our security, so we have no interest in projects which have inaccurate, incomplete or unsupported data. It is not possible to raise international project finance with inadequate documentation and therefore we only approve projects supported by international investment standard documentation.

How much does it cost to produce project documentation?

The cost of producing project documentation depends on the scale, nature and complexity of the project.

How is the data for the financial feasibility study derived?

It is essential that the data in your financial feasibility study is derived from the real-world cash flow performance of comparable existing projects and is not based on assumptions. Financial feasibility studies based on assumptions uncorroborated by real-world data comparisons carry no weight with international investors. To attract finance, your project must have a realistic profit and loss forecast and be able to demonstrate an acceptable internal rate of return.

Should I have a material disclosure statement in my project documentation?

Yes. You should incorporate a material disclosure statement in your project documentation confirming that you have not supplied data for the market feasibility study or the financial feasibility study. This gives potential investors confidence that the financial data in the core project studies is independent and objective.

My project is viable but my lack of management and operational experience is a weakness in my business plan. Can you help me?

Yes. Lenders are averse to risk and are therefore disinclined to invest in projects in which the managers do not have strong operational and managerial experience. We provide managers who have strong industry experience to incorporate into the business plan management structure to give confidence to the investors that their investment will be protected by experienced and proven managers. All such provision of personnel is subject to contract.

What happens while the project documentation is being prepared?

While the project documentation is being prepared we usually start our due diligence procedure and the project financing process.

THE SITE VISIT

What criteria must my project meet to be offered a site visit?

We offer a site visit only if, on the basis of the information you have provided, we believe your project is potentially viable, financeable and profitable.

What is the purpose of the site visit?

The site visit enables one of our senior executives:

  • To view the site and its environment and meet you, your business partners, managers and other project stakeholders.
  • To review the project plans, studies, documents, drawings, tests and surveys and confirm the accuracy of the information you have submitted to us.
  • To discuss and consider the management structure for the project.
  • To determine the degree to which the local population understand and want your project and to discuss planning and building regulations with local, and in the case of large projects, national officials.
  • To provide the project stakeholders with an independent and objective view of the project.
  • To form a view on how best to progress the project and consider future procedures, timings, requirements and development costs.

How long does the site visit take?

The length of a site visit depends on the scale and nature of the project but a typical site visit takes about three days.

What are my obligations in agreeing to a site visit?

If you are not already known to us you are required to pre-pay a return business class airfare ticket to your project site and local site visit expenses for one of our senior executives.

Do you charge a consultancy fee for the site visit?

No. We do not charge a consultancy fee for the site visit.

How do I pay the business class airfare?

Airfares are paid to our company in Hong Kong via wire transfer.

Why do you require prepayment of site visit costs?

Before we commit executive time to a project we need to ensure that you really believe you have a viable project. We have to be certain you are not wasting our time so we use airfare prepayment as an essential mechanism to screen out applicants who are not seriously committed to, or have no real intention of, developing their own project.

Are the site visit costs refundable?

No. Site visit costs are non refunable.

I would like to provide you with the air ticket rather than provide you with the funds to purchase the air ticket. Is this possible?

No. Unfortunately, this would breach IATA and airline regulations. Traveling on tickets not issued in accordance with IATA regulations would invalidate our insurance cover.

During the site visit what happens if you form the view that it will not be possible to finance my project?

If we think your project is not financially viable we will state this clearly at the end of the site visit. However, we never commit executive time to a site visit unless we are confident that the project is financially viable. It is therefore unusual for us to reject a project at the end of the site visit.

What happens after the site visit?

After the site visit we send you a report of our findings including our proposal on how to move your project forward.

What do I need to do to prepare my project for financing?

Usually, you must acquire the land and the project must be supported by the relevant government permits and project documentation.

THE PROJECT FINANCE APPLICATION FORM

In which language should I complete the project finance application form?

Unlike the online project finance enquiry form, you must complete the project finance application form in English. We do not process project finance application forms which are not in English.

What are my obligations when I submit a project finance application form?

There is no obligation whatever either on you or on us.

How much do you charge to process a project finance application form?

There is no charge for processing a project finance application form.

How long does it take to process a project finance application form?

It currently requires about four weeks for our analysts to process a fully completed project finance application form. We do not process project finance application forms which have not been fully completed.

In what format should I return the project finance application form?

The project finance application form must be returned as a single document or file. We do not accept project finance application forms which have been scanned into separate pages and then returned as multiple files attached to an email.

If you have a representative in my country may I discuss my project with him or her before submitting a project finance application form?

No. We first need to determine whether we are interested in your project so you must complete and return our project finance application form before we put you in contact with our representative.

What happens if you reject my project finance application?

We will email you indicating that your application has been unsuccessful.

What happens if you approve my project finance application?

We will email you with an offer of a site visit and information concerning the visit and the way forward.

THE ONLINE PROJECT FINANCE ENQUIRY FORM

What is the purpose of the online project finance enquiry form?

The online project finance enquiry form provides us with a quick overview of your project. This will enable us to determine whether it is worth your time and ours in proceeding to a full application by your completing our comprehensive project finance application form.

I have more than one project which I want to finance, do I have to fill out separate online project finance enquiry forms for each project?

Yes. We assess each project individually on its own merits so we require separate applications for each project.

In which language should I complete the online project finance enquiry form?

We would prefer you to complete the online project finance enquiry form English but you may complete it in any language.

Should I complete the Project Finance Details section of the project finance enquiry form in my local currency or in US dollars?

You must complete the Project Finance Details section in US dollars.

What happens after I submit the online project finance enquiry form?

We review the information in the form and then contact you, typically within one or two working days, informing you whether or not we are potentially interested in your project.

I have not completed your online project finance enquiry form but I sent you details of my project and I have not heard from you. Why is this?

It is a requirement that you fully complete our online project finance enquiry form to be considered as a possible applicant for project finance.

I completed your online project finance enquiry form for my project which does not meet your stated project eligibility criteria and I have not heard from you. Why is this?

We no longer have time to respond to enquiries which do not meet our clearly stated project eligibility criteria.

I completed your online project finance enquiry form for my project which meets your stated project eligibility criteria but I have not heard from you. Why is this?

We sometimes do not respond if the online project finance enquiry form has been inadequately or incorrectly completed. Common errors include not fully completing the form, putting multiple projects on one form, not stating financial information in US dollars or providing an incorrect email address.

I have experienced difficulty submitting your online project finance enquiry form – what should I do?

If you have a slow or restricted Internet connection it is possible that you may experience difficulty in submitting our online project finance enquiry form. In this case please simply type the required information into an email and send it to the email address at the bottom of this page.

Do you always respond to an enquiry made via your online project finance enquiry form providing that the project meets your eligibility criteria and is correctly completed?

Yes. Even if we decide not to pursue your project we email you accordingly, typically within one or two business days.

What are the most common reasons for your rejecting a project at this stage?

The most common reasons for our rejecting a project at this stage are: the project is valued at less than $5,000,000; the project is already under construction; the project requires 100% finance; the project does not have a sufficient construction component, the project is located in a region in which we are currently not operating or the project is an acquisition of an existing project.

If you are interested in my project as expressed in the online project finance enquiry form, what happens next?

We will send you, by email, a comprehensive project finance application form for you to complete and return.

PROJECT FINANCE APPLICATION PROCEDURE

What do I need to understand about your project finance application procedure?
Due to the very high volume of applications we receive it is absolutely essential that we operate very efficient application procedures. Our systems are designed to present our analysts with the information they need when they need it. All applicants are required to adhere to these procedures. We automatically reject almost all applications which unnecessarily add to our administrative burden.

What happens during the first phase of the project finance application procedure?
Initially your application will be evaluated by our analysts only and is not brought to the attention of our executives. During this phase, we do not enter into any form of discussion nor do we respond to individual enquiries whether by email, postal correspondence, phone calls or meetings, nor do we read feasibility studies, business plans or other documentation. Although this may appear to be somewhat impersonal it is the only method by which we can manage the very large number of enquiries we are currently receiving. If our analysts like your application it is then passed to our executives for their consideration otherwise we will email you with a rejection. Executive time is our most precious resource and we allocate it only when there are compelling reasons to do so. Consequently our executives only become involved at a later stage of your application.

Would you please give a step-by-step description of your project finance application procedure?

Yes. Please thoroughly familiarizes yourself with our project finance application procedure which is as follows:

  • First, you must fully complete our online project finance enquiry form.
  • We respond by email, usually within one or two working days, saying whether we are potentially interested in your project or not.
  • If we are potentially interested in your project we will email you with a comprehensive project finance application form which you must fully complete and return.
  • We email you to say that we have received the application form and that it has been passed to our analysts who then evaluate the information you have provided, this process currently takes about four weeks.
  • Our analysts make a recommendation to our executives who decide whether or not we should take your project further and we email you accordingly.
  • If we wish to take your project further we will offer you a site visit and email you with documentation detailing our international experience and other supporting information.
  • You accept or decline our site visit offer.
  • If you accept our offer of a site visit, the site visit takes place at a mutually agreed time.

Do you process applications which do not fully comply with your application procedures?

No. Please note that we do not process applications that do not fully comply with our requirement for efficient procedures.

How do I apply for project finance through you?

The first step is to fully complete our short online project finance enquiry form.

PROJECT ELIGIBILITY

What types of projects are you interested in financing and developing?
Our core business is financing and developing hotels, resorts, theme parks and other tourist-based land development projects but we also consider construction projects in a broad range of other industries including residential housing, commercial property, transport, manufacturing, energy, agriculture and mining. To interest us, a project must usually have either a unique selling proposition or a strong combination of supporting factors.What factors do your analysts consider when evaluating a project for financing?
Political and economic stability of the country in which the project is to be based, likely return on investment, market saturation, geographical location, site accessibility and many other factors.

Do you finance projects which do not have a significant construction component?
Yes, we do.

Which countries do you operate in?
We will consider projects in most countries including those listed on our
project finance territories page.

Which countries do you not operate in?
Currently, we are not considering projects in a number of countries including Afghanistan, Iraq, Nigeria and Palestine.

Do you finance projects valued at less than $5,000,000?
No. Our lower threshold to consider a project for financing is $5,000,000.

Do you finance projects valued at more than $100,000,000?
Yes, we do.

Do you finance projects which have no equity?
No. In the current economic climate we expect all
project finance applicants to put equity into their own project.

How many percent of the total amount of the project you can fund?
We can fund 80% of the total amount of the project but to be sure for the percent of the fund we need to look at the complete package of the project and if you have the right cash flow projections that can prove you can pay the interest or coupon on the bond annually plus at the bond of 5 years you can pay all the bond back or can refinance as when bond come due must pay all.

What is the term of the bond? How long will the fund can be?
Term of the bond  normally take for 3 years, 5 years, 10 years

Do you finance projects in which construction has started?
Yes, we do.

Do you finance projects which are solely land acquisitions?
Yes. With a proper strategy.

Do you refinance projects?
Yes, we do.

Do you provide bridging finance?
Yes, we do.

How do you obtain your fees?
We obtain our fees as a percentage of the finance placed in the project through us.

What is the total of your fees?
Our fee is 10% and the clients is requested to pay 1.5 %  upon signing the engagement letter to cover all the direct costs to issue the bonds and lawyers fees accountants fees printing fees plus bond writers costs and fees. Our 10% fee we will deduct when client receiver the bond.

Why have you chosen this project finance model?
Since we do not make a profit unless we provide finance for a project, our clients know that if we are prepared to put time and effort into a project we must be confident that we have good prospects of providing finance for the project.

How long has your business model been in operation?
Our business model and its project evaluation procedures have been in operation for over 10 years. Our methodology has been tested and proven by real-world experience.

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