Financial Engineering

Project financing can best be thought of as a form of asset-based financial engineering. It is asset-based because each financing is tailored around a specific asset or a related pool of assets. It involves financial engineering because, in so many cases, the financing structures cannot simply be copied from some other project. Rather, it must be crafted specifically for the project at hand.

Project financing is about the circumstances in which project financing might be beneficial to a firm’s stakeholders, and has emphasized that a project financing must be designed to serve a community of interests among several parties to a project. Consequently, no single rationale can completely explain why firms employ project financing. Clever corporate financial engineers will continue to find new applications of project financing. As the financial environment continues to evolve, project financing will enjoy a prominent place among leading successful financial techniques.

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