Justification of the investment project financing strategy involves the choice of financing methods, the identification of sources of investment financing and their structure.
The method of financing an investment project acts as a way to attract investment resources in order to ensure the financial feasibility of the project.
The following can be considered as methods of financing investment projects:
self-financing, i.e. investing only at the expense of own funds;
corporatization, as well as other forms of equity financing;
credit financing (investment loans of banks, issue of bonds);
mixed financing based on various combinations of the considered methods;
In the economic literature, there are different views on the composition of the methods of financing investment projects. One of the main disagreements is related to the understanding of the term “project finance”. With all the variety of interpretations of this term, its broad and narrow interpretations can be distinguished:
- in a broad definition, project financing means a set of forms and methods of financial support for the implementation of an investment project. Project financing is considered as a way to mobilize various sources of financing and the integrated use of different methods of financing specific investment projects; as financing, which has a strictly targeted nature of the use of funds for the needs of the investment project;
- in a narrow definition, project financing acts as a method of financing investment projects, characterized by a special way of ensuring the return on investment, which is based solely or mainly on cash income generated by an investment project, as well as the optimal distribution of all risks associated with the project between the parties involved in its implementation.
In the following presentation, we will proceed from a narrow interpretation of project financing as one of the methods of financing investment projects.
Sources of financing of investment projects are funds used as investment resources. They are divided into internal (own capital) and external (attracted and borrowed capital).
A general description of the sources of investment financing was given in Ch. 3. Here we will consider the main types of these sources in relation to the problems of financing real investment projects.
Internal financing (self-financing) is provided at the expense of the enterprise planning the implementation of the investment project. It involves the use of own funds - the authorized (share) capital, as well as the flow of funds generated in the course of the enterprise's activities, primarily net profit and depreciation. At the same time, the formation of funds intended for the implementation of the investment project must be strictly targeted, which is achieved, in particular, by allocating an independent budget for the investment project.
Self-financing can only be used to implement small investment projects. Capital-intensive investment projects, as a rule, are financed from not only internal but also external sources.
External financing involves the use of external sources: funds from financial institutions, non-financial companies, the population, the state, foreign investors, as well as additional contributions from the financial resources of the founders of the enterprise. It is carried out by mobilizing borrowed (equity financing) and borrowed (loan financing) funds.
Each of the sources of funding used has certain advantages and disadvantages (Table 9.1). Therefore, the implementation of any investment project involves the justification of a financing strategy, an analysis of alternative methods and sources of financing, and a thorough development of a financing scheme.
The adopted financing scheme should provide:
sufficient investment for the implementation of the investment project as a whole and at each step of the billing period;
optimization of the structure of investment financing sources;
reduction of capital costs and investment project risk.
Table 9.1. Comparative characteristics of investment project financing sources
Sources of financing
Internal sources (own capital)
Ease, accessibility and speed of mobilization. Reducing the risk of insolvency and bankruptcy. Higher profitability due to the absence of the need for payments on attracted and borrowed sources. Preservation of ownership and management of the founders
Limited amount of fundraising. Diversion of own funds from economic turnover.
Limited independent control over the efficiency of the use of investment resources
External sources (attracted and borrowed capital)
Opportunity to raise funds on a large scale.
Availability of independent control over the efficiency of use of investment resources
The complexity and duration of the procedure for raising funds. The need to provide guarantees of financial stability.
Increased risk of insolvency and bankruptcy. Decrease in profit due to the need to pay for borrowed and borrowed sources.
Possibility of loss of ownership and management of the company
Shareholding (as well as share and other contributions to the authorized capital) provides for equity financing of investment projects. Equity financing of investment projects can be carried out in the following main forms:
conducting an additional issue of shares of an operating enterprise, which is a joint-stock company in its organizational and legal form, in order to provide financial support for the implementation of an investment project;
attracting additional funds (investment contributions, deposits, shares) of the founders of an operating enterprise for the implementation of an investment project;
creation of a new enterprise designed specifically for the implementation of an investment project.
An additional issue of shares is used to implement large-scale investment projects, investment development programs, sectoral or regional diversification of investment activities. The use of this method mainly for financing large investment projects is explained by the fact that the costs associated with the issue are covered only by significant amounts of attracted resources.
Attracting investment resources within the framework of equity financing can be carried out through an additional issue of ordinary and preferred shares. It is believed that the issue of preferred shares as a form of equity financing is a more expensive source of financing investment projects than the issue of ordinary shares, since the payment of dividends to shareholders is mandatory for preferred shares. At the same time, ordinary shares, unlike preferred shares, give their owners more rights to participate in management, including the ability to control the strictly targeted use of funds to finance an investment project.
The main advantages of corporatization as a method of financing investment projects include the following:
payments for the use of attracted resources are not unconditional, but are made depending on the financial result of the joint-stock company;
the use of attracted investment resources has a significant scale and is not limited in terms of time;
the issue of shares makes it possible to ensure the formation of the necessary amount of financial resources at the beginning of the implementation of the investment project, as well as to defer the payment of dividends until the period when the investment project begins to generate income;
Shareholders may exercise control over the intended use of funds for the needs of the investment project.
However, this method of financing investment projects has a number of significant limitations. Thus, a joint-stock company receives investment resources upon completion of the placement of a share issue, and this requires time, additional costs, evidence of the financial stability of the enterprise, information transparency, etc. The procedure for an additional issue of shares is associated with registration, listing, and significant operating costs. When going through the issuance procedure, the issuing companies bear the costs of paying for the services of professional participants in the securities market, who act as an underwriter and investment advisor, as well as for registering the issue. .one
It should also be taken into account that the issue of shares may not always be placed in full. In addition, after the issue of shares, the company must pay dividends, periodically send reports to its shareholders, etc.
An additional issue of shares leads to an increase in the share capital of the company. A joint-stock company that is going to finance an investment project through an additional issue of shares must develop an effective strategy for increasing the liquidity and value of shares, which involves increasing the degree of financial transparency and information openness of the issuer, expanding and developing activities, increasing capitalization, improving financial condition and improving image.
For companies of other organizational and legal forms, the attraction of additional funds intended for the implementation of an investment project is carried out through investment contributions, contributions, shares of the founders or invited third-party co-founders in the authorized capital. This method of financing is characterized by lower transaction costs than the additional issue of shares, but at the same time, more limited funding.
The creation of a new enterprise, designed specifically for the implementation of an investment project, acts as one of the ways of targeted equity finance.
ing. It can be used by private entrepreneurs who establish an enterprise to implement their investment projects and need to attract partner capital; large diversified companies organizing a new enterprise, including on the basis of their structural divisions, to implement projects for expanding production, reconstruction and re-equipment of production, reengineering of business processes, development of fundamentally new products and new technologies; enterprises in a difficult financial condition that develop anti-crisis investment projects for the purpose of financial recovery, etc.
The financial support of the investment project in these cases is carried out by contributions of third-party co-founders to the formation of the authorized capital of a new enterprise, the allocation or establishment of specialized project companies - subsidiaries by the parent company, the creation of new enterprises by transferring to them part of the assets of existing enterprises.
One of the forms of financing investment projects by creating a new enterprise designed specifically for the implementation of an investment project is venture financing. The concept of "venture capital" (from the English. Venture - risk) means risk capital, invested primarily in new areas of activity associated with high risk. Venture financing allows attracting funds for the implementation of the initial stages of the implementation of investment projects of an innovative nature (development and development of new types of products and technological processes), characterized by increased risks, but at the same time, the possibility of a significant increase in the value of enterprises created in order to implement these projects. In this respect, venture investment differs from financing (by purchasing additional shares, shares, etc.) of existing enterprises, the shares of which can be acquired for the purpose of further resale.
Venture financing involves attracting funds to the authorized capital of an enterprise from investors who initially intend to sell their stake in the enterprise after its value increases during the implementation of the investment project. Income related to the further operation of the established enterprise will be received by those persons who acquire its share from the venture investor.
Venture investors (individuals and specialized investment companies) invest their funds with the expectation of receiving significant profits. Previously, with the help of experts, they analyze in detail both the investment project and the activities of the company offering it, financial condition, credit history, quality of management, and the specifics of intellectual property. Particular attention is paid to the degree of innovativeness of the project, which largely determines the potential for rapid growth of the company.
Venture investments are made in the form of acquiring a part of the shares of venture enterprises that are not yet listed on the stock exchanges, as well as providing a loan or in other forms. There are venture financing mechanisms that combine different types of capital: equity, loan, entrepreneurial. However, venture capital is mostly in the form of equity capital.
Venture capital companies usually include small enterprises whose activities are associated with a high degree of risk of promoting their products on the market. These are enterprises that develop new types of products or services that are not yet known to the consumer, but have great market potential. In its development, a venture enterprise goes through a number of stages, each of which is characterized by different opportunities and sources of funding.
At the first stage of development of a venture enterprise, when a product prototype is created, insignificant financial resources are required; however, there is no demand for this product. As a rule, the source of financing at this stage is the own funds of the project initiators, as well as government grants, contributions from individual investors.
The second (starting) stage, at which the organization of new production takes place, is characterized by a fairly high need for financial resources, while there is practically no return on investment yet. The main part of the costs here is associated not so much with the development of a product production technology, but with its commercial component (the formation of a marketing strategy, market forecasting, etc.). It is this stage that is figuratively called the "valley of death", because due to lack of funds and inefficient management, 70-80% of projects cease to exist. Large companies, as a rule, do not participate in investing in a venture enterprise during this period of its development; the main investors are individuals, the so-called angels or business angels, who invest their personal capital in the implementation of risky projects.
The third stage is the stage of early growth, when the production of the product begins and
its market value is derived. A certain profitability is provided, however, capital gains are not significant. At this stage, the venture enterprise begins to be of interest to large corporations, banks, and other institutional investors. Venture capital firms are created for venture capital financing in the form of funds, trusts, limited partnerships, etc. Venture capital funds are usually formed by selling a successful venture enterprise and creating a fund for a certain period with a certain direction and volume of investment. When creating a fund in the form of a partnership, the organizing company acts as the main partner; she contributes a small part of the capital by raising funds from other investors, but is fully responsible for the management of the fund. Once the target amount has been raised, the venture capital firm closes the subscription to the fund and proceeds to invest in it. After placing one fund, the firm usually moves on to arrange subscriptions for the next fund. A firm may manage multiple funds at various stages of development to help spread and mitigate risk.
At the final stage of development of a venture enterprise, venture investors withdraw from the capital of the companies they finance. The most common ways of such an exit are: buyout of shares by the remaining owners of the financed company, issue of shares through the initial placement of capital, takeover of the company by another company. In the US, successful venture capital investments usually end up with a public offering on the NASDAQ (the largest stock market for young innovative companies).
With the development of new technologies and the wide distribution of manufactured products, venture enterprises can achieve a high level of production profitability. With an average rate of return on government securities of 6%, venture investors invest their funds, counting on an annual return of 20-25%.
Thus, based on the nature of venture capital, venture capital is risky and is rewarded by the high profitability of the production in which it is invested. Venture capital has a number of other features. These include, in particular, the orientation of investors on capital gains, and not on dividends on invested capital. Since a venture company begins listing its shares on the stock market three to seven years after the investment, venture capital has a long waiting period for market realization and the amount of its growth is revealed only when the company enters the stock market. Accordingly, the founder's profit, which is the main form of income for venture capital, is realized by investors after the shares of the venture enterprise begin to be quoted on the stock market.
Venture capital is characterized by the distribution of risk between investors and project initiators. In order to minimize risk, venture investors distribute their funds between several projects, while at the same time one project can be financed by a number of investors. Venture investors, as a rule, seek to directly participate in the management of the enterprise, making strategic decisions, since they are directly interested in the effective use of invested funds. Investors control the financial condition of the company, actively contribute to the development of its activities, using their business contacts and experience in the field of management and finance.
The attractiveness of capital investments in venture enterprises is due to the following circumstances:
acquisition of a stake in a company with a likely high profitability;
ensuring a significant increase in capital (from 15 to 80% per annum);
availability of tax benefits.
The volume of venture financing in industrialized countries is growing dynamically. Venture capital is acquiring a decisive role in the development of the economy. This is due to the fact that it was thanks to venture enterprises that it was possible to implement a significant number of developments in the latest areas of industry, to ensure the rapid re-equipment and restructuring of production on a modern scientific and technical basis.
The largest volume of venture capital investments in the world falls on the United States (about $22 billion), followed by the countries of Western Europe and the Asia-Pacific region by a significant margin. Venture capital is in its infancy: there are currently 20 venture capital funds operating here, managing financial assets in the amount of about $ 2 billion.
The main forms of credit financing are investment loans from banks and targeted bonded loans.
Investment loans from banks act as one of the most effective forms of external financing of investment projects in cases where companies cannot ensure their implementation at their own expense and the issuance of securities. The attractiveness of this form is explained, first of all:
the possibility of developing a flexible financing scheme;
no costs associated with register
ation and placement of securities;
using the effect of financial leverage, which allows to increase the return on equity, depending on the ratio of equity and debt capital in the structure of invested funds and the cost of borrowed funds;
reduction of taxable income due to the attribution of interest payments to costs included in the cost price2.
Investment loans are, as a rule, medium and long-term. The term for attracting an investment loan is comparable to the terms for implementing an investment project. At the same time, an investment loan may provide for a grace period, i.e. grace period for repayment of principal. This condition makes it easier to service the loan, but increases its cost, since interest payments are calculated from the outstanding amount of the debt.
Investment loans are issued, as a rule, in the form of a term loan with a maturity in the range of three to five years on the basis of drawing up an appropriate loan agreement (agreement). In some cases, for this period, the bank opens a credit line to the borrower.
To obtain an investment loan, the following conditions must be met:
preparation of a business plan for an investment project for a creditor bank. The business plan of an investment project serves as a decision-making tool for project lending based on the project's effectiveness and the possibility of repaying the loan;
collateral for loan repayment. In addition to the business plan of the investment project, appropriate security must be provided in the form of a pledge of property, guarantees and sureties of third parties, etc. The market value of the property pledge, assessed at the expense of the borrower by independent appraisers, must exceed the loan amount, agreement by the borrower, the liquidation value of the collateral may be lower than the market value, which will lead to losses for the creditor bank;
providing the creditor bank with comprehensive information confirming the stable financial condition and investment creditworthiness of the borrower;
fulfillment of guarantee obligations - restrictions imposed on the borrower by the lender. In order to minimize the risk on the granted loan, the lender establishes in the loan agreement a number of different restrictive conditions that ensure the preservation of the current financial position of the company (limitations on capital expenditures, restrictions on the payment of dividends and resale of shares, restrictions on obtaining another long-term loan from a new lender, refusal of collateral property to another creditor, a ban on transactions for the lease of property, etc.);
Ensuring the lender's control over the targeted spending of funds on a loan intended to finance a specific investment project, for example, opening a special account from which funds are transferred only to pay for the capital and current costs provided for in the business plan of the investment project.
One of the varieties of term loans used to finance investment projects is a loan secured by real estate (mortgage loan).
To finance investment projects, the following can be used:
standard mortgage loans (debt repayment and interest payments are made in equal installments);
mortgage loans with uneven interest payments (for example, at the initial stage, premiums increase at a certain constant rate, and then paid in constant amounts);
mortgage loans with a variable amount of payments (only interest is paid during the grace period, and the principal amount of the debt does not increase);
mortgage loans with a collateral account (when issuing a loan, a special account is opened, into which the borrower deposits a certain amount as a guarantee of payment of contributions at the first stage of the project).
The mortgage lending system provides for a mechanism for savings and long-term lending at a low interest rate with installment payments for long periods.
In world practice, various types of mortgage lending systems are used, in particular:
a system that includes elements of mortgages and loans secured by a new construction facility with a gradual provision of loan amounts;
a system based on mortgaging existing real estate and obtaining a loan against it for new construction;
a system that provides for mixed financing, in which, along with a bank loan, additional sources of financing are used (housing certificates, funds from citizens, enterprises, municipalities, etc.);
a system that involves the conclusion of a contract for the sale of existing real estate with a delay in the transfer of rights to it for the period of new construction.
An important component of mortgage lending is the valuation of property offered as collateral. In the event of the borrower's insolvency, debt repayment will occur at the expense of the value of the collateral, so the accuracy of collateral assessment in mortgage lending is of particular importance.
nie. Real estate appraisal is determined by a number of factors, the main of which are: supply and demand for real estate, the usefulness of the object, its territorial location, income from the use of the object.
In the case of long-term and close cooperation between the creditor bank and the borrower to finance an investment project, the bank may open an investment credit line for the borrower. An investment credit line is a legal formalization of the lender's obligation to the borrower to provide loans (tranches) over a certain period as the borrower's need arises to finance certain capital costs of the project within the agreed limit. Opening an investment credit line has a number of advantages for both the borrower and the lender. Benefits for the borrower include a reduction in overhead costs and time losses associated with negotiating and concluding each individual loan agreement, as well as savings on interest servicing of loan amounts that exceed the current financing needs of the investment project. For the creditor bank, in addition to reducing the costs associated with the execution and maintenance of loan agreements, the tasks of refinancing (search for sources) of loan funds are facilitated and the risks of loan default are reduced, since the amounts of individual tranches are less than the amount of the loan when it is provided at a time. At the same time, the creditor bank assumes the risks associated with changes in the situation on the loan capital market, since, regardless of the nature of these changes, it is obliged to fulfill its obligations to the borrower and provide him with a loan in full accordance with the credit line agreement.
There are frame (target) and revolving investment credit lines. The framework credit line involves the payment by the borrower of a number of separate capital expenditures within a single loan contract implemented over a certain period. A revolving line of credit is a series of short- and medium-term loan contracts extended within a specified period; however, the interest rate is usually higher than the rate on a traditional term loan.
According to the ratio of the beginning of payments for tranches and the terms of the credit line agreement, there are:
investment credit lines for which the term of repayment and interest servicing of multi-temporal tranches relates to one point in time (for example, the term for the completion of a credit line);
investment credit lines for which the term of repayment and interest servicing of each individual tranche is less than the term of the credit line agreement. In this case, there may be a time gap between receiving sufficient income from the project and servicing the first tranches. Therefore, when developing a debt service financial scheme, the borrower should provide for sources of payments that are not related to the project, or increase the amounts of subsequent tranches by the amount of the required payments.
The interest rate on investment loans usually takes into account the risk of the investment project. It can be calculated by increasing the base interest rate (indexed, for example, to changes in the refinancing rate of the Central Bank) by the risk premium for the project under consideration.
Target bonded loans represent the issue by the enterprise - the initiator of the project of corporate bonds, the funds from the placement of which are intended to finance a specific investment project.
The issuance and placement of corporate bonds makes it possible to raise funds to finance investment projects on more favorable terms compared to a bank loan:
collateral required by banks is not required;
the issuing enterprise has the ability to raise a significant amount of funds on a long-term basis at a lower cost of borrowing, while it gets direct access to the resources of small investors;
repayment of the principal debt on bonds, unlike a traditional bank loan, occurs, as a rule, at the end of the loan maturity, which makes it possible to service the debt at the expense of income generated by the project;
the bond issue prospectus contains only a general description of the investment project, which eliminates the need to provide creditors with a detailed business plan of the investment project;
the issuing company is not obliged to provide each of the potential buyers of bonds with internal financial information other than that contained in the prospectus, as well as a report on the progress of the investment project;
in case of possible complications related to the implementation of the investment project, the issuing enterprise may redeem its own bonds, and the redemption price may be less than the amounts received during the initial placement of bonds;
due to the fragmentation of bondholders, the likelihood of creditors intervening in the internal activities of the enterprise is minimized;
Gets an opportunity for operational debt management, regulation of risks associated with the issuance and circulation of bonds, optimization of debt in accordance with changing conditions of the internal and external environment by offering new conditions and using various combinations of debt securities.
At the same time, raising funds by issuing a targeted bonded loan imposes a number of requirements on the issuing company. First of all, the issuing company must have a stable financial condition, a reasonable and rational internal business plan for the investment project, and bear the costs associated with the issue and placement of bonds. As a rule, in order to go through a complex procedure for issuing bonds, companies resort to the services of professional participants in the securities market - investment companies and banks, whose service costs reach 1–4% of the issue face value for large volumes of bonded loans. In addition, when issuing bonds, which, like shares, are emissive securities, issuers pay a fee for state registration of this issue.
The advantages of bonds appear only in the case of significant amounts of borrowing, which only fairly large companies can afford. This is explained not only by significant issue costs and the fact that, with small volumes of issue, bonds are not sufficiently liquid. Meanwhile, it is the high liquidity of corporate bonds that is one of the most attractive characteristics for investors. The functioning of the secondary market makes it possible to determine the objective parameters of bond issues, which the issuer is guided by when developing the terms of a bonded loan, to identify the objective values of interest rates for attracting and placing financial resources for issuers with different levels of credit risk.
The development of the conditions for a targeted bonded loan involves the establishment of the following main parameters:
the volume of borrowing, which is determined by the issuer's needs in raising funds for the implementation of the investment project, the market's ability to satisfy these needs at a price that provides the investor with the required return, as well as legal requirements. ;
borrowing period, which depends on the period of implementation of the investment project, market conditions and legislative restrictions.
the nominal value of the bond, determined by liquidity requirements and the amount of costs for servicing the bonded loan;
date and price of repayment of the bonded loan. The maturity date of a bonded loan is determined by the borrowing period, as well as, in some cases, by additional conditions. The redemption price depends on the type of bond (for coupon securities, the redemption price is the face value, discount bonds are redeemed at a discount from the face value), as well as the current and prospective situation in the securities market;
form of bond issue (documentary, non-documentary, nominal, bearer). When choosing this option, the issuer is guided by the amount of costs associated with the circulation of a particular type of bond;
the form of income payment (bonds with a fixed coupon, bonds with a floating coupon, discount bonds or bonds with a zero coupon). The choice of this parameter depends on the characteristics of the investment project being financed, as well as market trends. So, in the conditions of increasing interest rates in the financial market during the period of circulation of bonds, the preferred form for the issuer is bonds with a fixed coupon;
the frequency and size of coupon payments, which are based on balancing oppositely directed factors: on the one hand, the amount of expenses for servicing the bonded debt, on the other hand, the yield required by investors. At the same time, the degree of the issuer's creditworthiness, which determines the level of credit risk, is of particular importance. The amount of the risk premium depends on the credit rating assigned to the issuer by international or national rating agencies, as well as the credit rating of the country;
country and currency of borrowing. In relation to the national market, bonds can be domestic, which are issued by residents and denominated, as a rule, in the national currency, and external, placed on foreign markets. External bonds are divided into foreign bonds placed abroad, as a rule, in the currency of the placement country, and Eurobonds placed outside both the borrowing country and the country in whose currency they are nominated;
additional conditions for issuing bonds, the purpose of which is to minimize the cost of servicing a loan, compensate for risks and other parameters that may reduce the investment attractiveness of bonds. Bonds that provide additional benefits for investors include, in particular: bonds with the right of early call; bonds convertible into shares; secured bonds, fulfillment of obligations
in which is secured by a pledge, a special fund or guarantees. The placement of bonds without collateral is allowed not earlier than the third year of the company's existence and subject to the proper approval by this time of two annual balance sheets of the company. Exchange-traded bonds placed at open auctions of the stock exchange also do not have collateral.
Leasing (from the English lease - rent) is a complex of property relations arising from the transfer of a leasing object (movable and immovable property) for temporary use on the basis of its acquisition and long-term lease. Leasing is a type of investment activity in which the lessor (lessor) under a financial lease (leasing) agreement undertakes to acquire ownership of property from a certain seller and provide it to the tenant (lessee) for a fee for temporary use.
Features of leasing operations in comparison with traditional lease are as follows:
the object of the transaction is chosen by the lessee, and not by the lessor, who purchases the equipment at his own expense;
the leasing period is usually less than the period of physical wear and tear of the equipment;
at the end of the contract, the lessee can continue the lease at a reduced rate or purchase the leased property at the residual value;
the role of the lessor is usually played by a financial institution - a leasing company, a bank.
Leasing has signs of both industrial investment and credit. Its dual nature lies in the fact that, on the one hand, it is a kind of capital investment, since it involves investing in tangible property in order to generate income, and on the other hand, it retains the features of a loan (provided on the basis of payment, urgency, repayment).
Acting as a kind of fixed capital loan, leasing, however, differs from traditional lending. Leasing is usually considered as a form of lending for the acquisition (use) of movable and immovable property, an alternative to a bank loan. The advantages of leasing over lending are as follows:
the company-lessee may receive property on lease for the implementation of an investment project without first accumulating a certain amount of its own funds and attracting other external sources;
leasing may be the only method of financing investment projects implemented by companies that do not yet have a credit history and sufficient assets to secure collateral, as well as companies in financial difficulty;
registration of leasing does not require such guarantees as obtaining a bank loan, since the leasing transaction is secured by the property taken on lease;
the use of leasing increases the commercial efficiency of the investment project, in particular, due to tax incentives and the use of accelerated depreciation, as well as the reduction in the cost of some work related to the acquisition of property (for example, participation in pre-sale preparation of equipment, quality control, equipment installation, consulting, coordinating and information services, etc.);
lease payments are highly flexible; they are usually set taking into account the real capabilities and characteristics of a particular lessee;
If a bank loan for the purchase of equipment is usually issued in the amount of 60-80% of its value, then leasing provides full financing of capital costs, and does not require the immediate start of payments of leasing payments.
Due to its advantages, leasing has become widespread in the economy of various countries. Thus, the share of leasing in the total volume of investment financing sources is: in the USA about 30%, in Germany - 15.7%, in France, Great Britain, Japan - about 9%.
The main elements of leasing operations: the subject of leasing, subjects of leasing, the term of leasing, services provided under leasing, leasing payments.
The subject of leasing may be movable and immovable property, with the exception of land plots and other natural objects.
The subjects of leasing, depending on its type, can be two or more parties. A classic leasing transaction involves a manufacturer (supplier) of leasing property, a lessor (leasing firms, companies and banks) and a lessee (an enterprise in need of leasing property). However, in the case of large-scale projects, the number of participants may increase.
Leasing subjects can be divided into direct and indirect participants.
Direct participants include:
leasing firms, companies and banks acting as lessors;
production (industrial and agricultural), trade and transport enterprises and the population (lessees);
suppliers of the objects of the transaction - production (industrial) and trading companies.
Indirect participants are:
commercial and investment banks lending to the lessor and acting as guarantors of transactions;
brokerage and other intermediary firms
Leasing firms by the nature of their activities are divided into specialized and universal. Specialized firms, as a rule, deal with one type of goods (cars, containers) or with goods of one group of standard types (construction equipment, equipment for textile enterprises). Typically, these companies have their own fleet of machines or stock of equipment, carry out their own maintenance and ensure that it is kept in good operating condition. Universal leasing companies lease a wide variety of types of machinery and equipment. They give the tenant the right to choose the supplier of the equipment he needs, place an order and accept the object of the transaction. Maintenance and repair of the leased item is carried out either by the supplier or by the lessee himself. The lessor, therefore, actually performs the function of a structure that organizes the financing of the transaction.
Leasing companies are mostly subsidiaries or affiliates of industrial and commercial firms, banks and insurance companies. Most often, leasing companies are created with the active financial participation of banks. The introduction of banks into the leasing services market is due to the fact that leasing is a capital-intensive type of business, and banks are the main holders of financial resources. In addition, leasing services, by their economic nature, are closely related to bank lending and are a kind of alternative to the latter. Competition in the financial market forces banks to expand leasing operations, which gives reason to classify banks as the first category of entities engaged in leasing operations. At the same time, banks also control independent leasing firms, providing them with loans. By lending to leasing companies, they indirectly finance lessees in the form of commodity credit.
The second category of firms engaged in leasing operations includes industrial and construction firms that use their own products for leasing. The third category of firms carrying out transactions on the basis of leasing includes various intermediary and trading firms.
The complex of leasing relations, as a rule, involves:
a purchase and sale agreement between a leasing company and a manufacturer (supplier) for the purchase of equipment, where the manufacturer (supplier) acts as a seller, and the leasing company acts as a buyer;
a leasing agreement between the leasing company and the lessee, under which the leasing company transfers to the lessee for temporary use equipment purchased from the seller specifically for this purpose. If the leasing agreement involves the sale of property after the expiration of the agreement, then the relationship of temporary use is transferred to the relationship of sale between the lessor and the lessee, but only after the expiration of the agreement or in case of early repurchase of the equipment;
loan agreement. The presence of a loan agreement is typical for leasing companies owned by a bank or included in a banking group or financial corporation.
The term (period) of leasing is the duration of the leasing agreement. When determining it, the life of the property, the depreciation period, the cycles of the appearance of a more productive or cheaper analogue of the object of the transaction, inflation rates, and market conditions are taken into account.
As part of the services provided under leasing, there are: technical (transportation, installation, adjustment and repair of equipment), advisory and other services.
The size and frequency of payment of leasing payments are determined by the leasing agreement. Usually they include one or more components calculated at the rates established by the agreement from the relevant base (when calculating the individual components of the lease payment, either the initial or balance sheet value, or the residual value, or the value of the leased property not reimbursed by the time of payment is taken as the base). The amount of payments or the procedure for calculating them by steps of the billing period may change.
According to the Guidelines for calculating lease payments,
1) the amounts of leasing payments are calculated for the years covered by the leasing agreement;
2) the total amount of leasing payments for the entire term of the leasing agreement is calculated as the sum of payments by years;
3) the amounts of leasing contributions are calculated in accordance with the periodicity of contributions chosen by the parties, as well as the accrual methods agreed upon by them and the method of payment.
The total amount of lease payments (LP) by years is determined by the formula
LP \u003d AO + PC + KV + DU + VAT, (9.33)
where AO is the amount of depreciation due to the lessor in the current year; PC - payment for credit resources used by the lessor to acquire property; KV - commission fee of the lessor; DU - payment to the lessor for additional services provided for by the leasing agreement; VAT is a value added tax paid by the lessee for the services of the lessor.
The calculation algorithm is based on the fact that
by reducing the debt on a loan received by the lessor for the acquisition of property, the amount of payment for the loans used is reduced. If the lessor's commission rate is set as a percentage of the residual value of the property, then the amount of the commission will also decrease.
The methodology provides for the possibility of choosing the method of paying lease payments:
a method with a fixed total amount, which involves the accrual of the total amount of payments in equal installments over the entire lease term;
method with an advance payment, which involves the payment of an advance payment to the lessor when concluding a leasing agreement;
the method of minimum payments, according to which the total amount of lease payments includes the amount of depreciation of the leased property, payment for borrowed funds used by the lessor, commission and payment for additional services of the lessor.
The terms of the lease agreement may provide for accelerated depreciation of the leased property. The increasing coefficient to the depreciation rate is set by agreement of the parties in the range from 1 to 3. The increased depreciation rate allows you to reduce taxable profit during the period of its application. After the repurchase of the leased property, the usual depreciation procedure applies to it again.
The lessor or the lessee, depending on the terms of the contract, pays for the insurance of the leased property. By agreement of the parties, the lessor can assume not only the costs of acquiring leasing equipment, but also other costs (additional services) associated with this acquisition, selection of a manufacturer, delivery, payment of customs duties, participation in installation and commissioning, personnel training, etc. P. Otherwise, these costs are incurred by the lessee, are included in the cost of fixed assets and depreciated along with the equipment. Similarly, the lessor, if necessary, can pay for a set of low-value and wearing items supplied with the equipment.
The cost of additional services by agreement of the parties may be included in the lease payments. This enables the lessee to enjoy income tax benefits. At the same time, the need to pay value added tax on lease payments (which is then reimbursed when VAT is paid for services sold) increases the lessee's need for working capital, and the need to pay VAT on purchased equipment (which is then reimbursed when the equipment is put into operation) has a similar effect. working capital of the lessor.
In the most general form, the essence of the leasing transaction is as follows. The lessee, who does not have free financial resources, applies to the leasing company with a business proposal to conclude a leasing transaction, according to which the lessee selects a seller who has the required property, and the lessor acquires it and transfers it to the lessee for temporary possession and use for a fee specified in the contract . At the end of the term of the leasing agreement, depending on its terms, the lessee can: buy the object of the transaction, but at the residual value; conclude a new contract; return the object of the transaction to the leasing company.
The organization of leasing operations varies significantly depending on the type of leasing, the entities involved, and the specifics of national legislation.
Consider the most common way to implement leasing transactions (Fig. 9.4).
Rice. 9.4. Leasing transaction technology (1–8 - see text)
1. Signing a leasing agreement. In order to obtain the necessary equipment, the lessee submits to the leasing company an application for rent, which indicates the type of property, its characteristics and the period of use of it, the supplier (manufacturer). The application also contains data characterizing the production and financial activities of the lessee. After analyzing the information provided, the leasing company makes a decision, brings it to the attention of the lessee with the application of the general conditions of the leasing contract and at the same time informs the equipment supplier about the intention of the leasing company to purchase equipment. The lessee, having familiarized himself with the general terms of the leasing agreement, sends the lessor a letter with a confirmation-commitment and a signed copy of the general terms of the contract, attaching an order form for equipment to it. This document is drawn up by the supplier and endorsed by the lessee.
2. Purchase of goods. Having received a copy of the contract and an order form (the contract for the sale of equipment concluded by the supplier and the leasing company, or a delivery order can be used), the lessor signs the order and sends it to the equipment supplier. The owner of the leased property, who retains ownership rights, is the lessor, the recipient under the transaction is the lessee, who does not act as the owner
3. Delivery of goods. The supplier of the equipment ships it to the lessee in accordance with the terms of the contract and prior notice to the lessee about the forthcoming delivery.
4. Acceptance of goods. Responsibilities for the acceptance of equipment are assigned to the lessee. The supplier, as a rule, carries out the installation and commissioning of the object of the transaction. Upon completion of the work, an acceptance protocol is drawn up, indicating the actual delivery of the equipment, its installation and commissioning without claims against the supplier. The protocol of acceptance is signed by all participants in the leasing operation.
5. Crediting by the bank of the leasing operation (if necessary). Typically, a leasing company receives a loan from a bank that took an active part in its creation.
6. Payment for delivery. After signing the acceptance protocol, the lessor pays the cost of the transaction object to the supplier.
7. Payment of lease payments. Payments to the lessor are the basis for the repayment of the received commodity credit. They involve the repayment of the cost of leased property, payment of interest, as well as some other expenses.
8. Repayment of the loan with the payment of interest on it. This stage is necessary in case of attracting a bank loan to finance a leasing transaction.
There are two types of leasing: operational (operational) and financial. The distinction between operational and financial leasing is based on such a criterion as the payback of property. In this regard, operational leasing is a leasing with incomplete payback, and financial leasing is a leasing with full payback.
Operational leasing takes place when property is leased out for a period significantly less than the depreciation period (usually for a period of two to five years). The object of such leasing is usually equipment with a high obsolescence rate, equipment that is required for a short period of time (seasonal work or one-time use); new, untested equipment or equipment requiring special maintenance. Under operational leasing, the lessor's expenses related to the acquisition and maintenance of leased items are not covered by rental payments during one leasing contract. The risk of losses from damage or loss of property lies mainly with the lessor.
Financial leasing provides for the payment during the period of the contract of lease payments covering the full cost of equipment depreciation or most of it, additional costs and profits of the lessor. Financial leasing requires large capital expenditures and is carried out in cooperation with banks.
Depending on the characteristics of the organization of relations between the lessee and the lessor, direct, indirect and leaseback are distinguished. Direct leasing takes place when the manufacturer or owner of the property himself acts as a lessor, and indirect - when leasing is carried out through intermediaries. The essence of a leaseback is that a company sells a part of its own property to a leasing company and then leases it. Thus, the enterprise, without resorting to a loan, receives additional funds from the sale of its property, the operation of which does not stop. Return leasing is an effective way to improve the financial condition of the company.
According to the methods of provision, fixed-term and renewable leasing are distinguished. In case of urgent leasing, the contract is concluded for a certain period, and in case of renewable (rollover) lease, the leasing contract is renewed after the expiration of the first term of the contract.
Depending on the object of lease, leasing of movable and immovable property is distinguished. The most common form is the leasing of movable property.
According to the volume of service, they distinguish: net leasing, in which the lessee undertakes the maintenance of the transferred property; leasing with a full range of services, when the full maintenance of the object of the transaction is assigned to the lessor; leasing with a partial set of services, in which the lessor is entrusted with only certain functions for servicing the leased asset.
Depending on the place of leasing operations, there are: internal leasing, when all subjects of the transaction represent one country, and external leasing, when one of the parties or all parties belong to different countries, and also if one of the parties is a joint venture. External leasing can be export and import. With export leasing, the foreign country is the lessee, and with import leasing, the lessor.
When choosing leasing as a method of financing an investment project, it is advisable for an enterprise - a potential lessee to consider alternative options for financing an investment project that provide for the acquisition of the same property at its own expense or on credit, taking into account the following circumstances:
the terms of the loan included in the calculation must be accessible to the lessee;
lessor specializing in leasing
leasing types of equipment, often has the opportunity to purchase equipment at lower prices than a separate enterprise, which will affect the lease payments of the lessee. In this case, the cost of equipment when acquiring it for own funds or on credit will be higher than the cost of leasing equipment;
under the leasing scheme, a number of works (consulting services, search for a supplier, installation of equipment, etc.) can be performed by the lessor, which, as a rule, leads to some increase in the costs of the enterprise, but at the same time a significant reduction in the risk of possible errors and miscalculations, the losses from which are much higher than additional costs;
obtaining a loan for the purchase of equipment usually involves the payment of collateral. This means that a comparison of leasing and credit options is allowed only in cases where the enterprise has this opportunity;
when acquiring property at the expense of own funds or on credit, it is not necessary to insure the equipment. At the same time, leasing agreements, as a rule, provide for insurance of leased property. This is taken into account in the additional costs of the insured and in the calculation of his need for working capital (since the terms of insurance and lease payments may not coincide);
Financing an investment project using leasing may involve various forms of using the lessee's own funds, including: transfer to the supplier as partial payment for equipment; transfer to the lessor as the first lease payment; contribution to the authorized capital of the lessor company; transfer to the lessor as collateral.
When comparing leasing and alternative financing options for an investment project, it is necessary to take into account not only tax savings and the cost of services, but also bring them to the current cost by discounting.
The effectiveness of the use of leasing for the lessee can be determined by calculating the net present value, taking into account adjustments for tax benefits and tax payments:
where I is the cost of the leased asset; Lt - lease payment in the t-th period, E - advance payment; T is the value added tax (VAT) rate; r* is the discount rate adjusted for the VAT rate r* = r (1 - T).
Budget financing of investment projects is carried out, as a rule, through financing within the framework of targeted programs and financial support. It provides for the use of budgetary funds in the following main forms: investments in the authorized capital of existing or newly created enterprises, budget loans (including investment tax credits), the provision of guarantees and subsidies.
Federal targeted programs are a tool for implementing priority tasks in the field of state, economic, environmental, social and cultural development of the country. They are financed from the federal budget, the budgets of the subjects of the federation, municipalities and extrabudgetary funds. Priority sectors for which state support is required in the implementation of investment projects at the expense of the federal budget are determined by the Ministry of Economic Development and Trade and the Ministry of Finance of the Russian Federation in agreement with other federal government bodies. Objects that are mainly of federal importance (construction sites and objects of new construction and technical re-equipment for federal state needs) are included in the Federal Targeted Investment Program (FTIP), which determines the volume of public investment by industry and department. The list of objects financed by the FTIP is formed based on the volume of state capital investments directed to the implementation of federal targeted programs, as well as to the solution of certain critical socio-economic issues not included in these programs on the basis of proposals approved by decisions of the President of the Russian Federation or the Government of the Russian Federation. The formation of this list is carried out by the Ministry of Economic Development and Trade of the Russian Federation, taking into account the proposals of state customers for investment projects, the results of contract tenders and concluded state contracts.
Departmental targeted investment programs provide for the implementation of investment projects that ensure the development of industries and sub-sectors of the economy.
Regional and municipal target investment programs are designed to implement priority areas of socio-economic development at the regional and municipal levels, respectively.
Budgetary funds provided for financing investment programs are included in the expenditures of the budget of the corresponding level. The procedure for providing budget investments involves the preparation of a package of documents consisting of a feasibility study of the investment project, design estimates, a plan for the transfer of land and facilities, a draft agreement between the relevant executive body
oh power and the subject of investment on participation in the property of the latter. Only if these documents are available, an investment project can be included in the draft of the corresponding budget.
The provision of state budget investments to legal entities that are not state unitary enterprises entails the simultaneous emergence of the state's ownership right to a share in the authorized (share) capital of such a legal entity and its property. The objects of production and non-production purposes created with the attraction of budgetary funds in the equivalent part of the authorized (share) capital and property are transferred to the management of the relevant state property management bodies.
Forms of budgetary financing of investment projects selected on a competitive basis are determined by the nature of the economic tasks to be solved within a specific period of the country's development. Thus, in the mid-1990s, State investment policy measures provided for the transition from non-refundable financing to the provision of budgetary funds on a repayable and paid basis for the implementation of highly efficient and fast-payback investment projects.
The conditions and procedure for the competitive selection and financing of investment projects at the expense of budgetary funds were determined by the Methodological Recommendations on the procedure for organizing and holding competitions for the placement of centralized investment resources3.
Placement of centralized investment resources was carried out on a competitive basis in order to increase the efficiency of such placement, to attract funds from other investors - domestic and foreign. The competitive procedure determined the stages and conditions for organizing and holding a tender, the corresponding functions of federal executive authorities, the Commission for Investment Tenders under the Ministry of Economy of the Russian Federation, the rights and obligations of the organizers and participants in the tender, the basic requirements for tender documentation and tender proposals of participants, the procedure for considering these proposals, and also registration of results of competitions.
The main requirements for investment projects were as follows:
the right to participate in the competition for state support have investment projects related primarily to the development of "points of growth" of the economy;
the payback period of these projects should not exceed, as a rule, two years;
investment projects are submitted for a competition at the Ministry of Economic Development and Trade of the Russian Federation and must have a business plan, as well as the conclusions of the state environmental expertise, state departmental and independent expertise;
for commercial projects, the competition for which is held according to the proposals of private investors, the share of the investor's own funds, formed from profit, depreciation and sale of shares, must be at least 20% of the capital investments provided for the implementation of the project.
The investment projects submitted for the competition were classified into categories:
category A - projects that ensure the production of products that have no foreign analogues, provided that they are protected by domestic patents or similar foreign documents;
category B - projects that ensure the production of export goods of non-primary industries that are in demand on the foreign market, at the level of the best world samples;
category B - projects that ensure the production of import-substituting products with a lower price level;
category G - projects that ensure the production of products that are in demand in the domestic market.
Decisions on the provision of state support were made by the Commission on Investment Competitions under the Ministry of Economic Development and Trade of the Russian Federation and sent to the Ministry of Finance of the Russian Federation for inclusion in the draft federal budget for the next financial year. The amount of state support was set depending on the category of the project and could not exceed 50%, 40%, 30% and 20% of borrowed funds, respectively.
The investor had the right to choose the following forms of state financial support for the implementation of projects selected on a competitive basis:
budget credit - the provision of federal budget funds on a repayable and paid basis to finance expenses for the implementation of highly efficient investment projects with a repayment period of two years with interest paid for the use of the funds provided in the amount established from the current discount rate of the Central Bank of the Russian Federation. The conditions for the provision, use, return and payment for the funds provided were stipulated in agreements concluded by the Ministry of Finance of the Russian Federation with authorized commercial banks;
fixing in state ownership of a part of the shares of the joint-stock companies being created, which were sold on the securities market after two years from the start of receiving profit from the project (taking into account the payback period), and the direction of the proceeds from the sale of these shares to the federal budget
provision of state guarantees for the reimbursement of part of the financial resources invested by the investor in the event of a failure in the implementation of the investment project through no fault of the investor.
Similar forms were used to provide financial support for effective investment projects at the regional and municipal levels. Budget loans and subsidies were provided for the implementation of investment projects through their partial financing, in addition, they could be allocated as partial compensation for the payment of interest on investor bank loans attracted for the implementation of the project.
Starting from 2008, in accordance with changes in budget legislation, budget loans can be issued to private investors in the form of targeted foreign loans. A transition is being made to budget financing of investment projects selected on a competitive basis at the expense of the Investment Fund of the Russian Federation.
The Investment Fund of the Russian Federation was created to implement investment projects of national importance and carried out on the basis of public-private partnership. The main areas of state support at the expense of this fund are related to the modernization of non-profit infrastructure, fixed assets and technologies related to the strategic priorities of the state, the creation and development of an innovation system, and the provision of institutional reforms. The procedure for the formation of the Investment Fund of the Russian Federation, the forms, mechanisms and conditions for providing state support at the expense of its funds are determined by the Regulations on the Investment Fund of the Russian Federation. Financial support for projects that have passed a competitive selection involves the use of such forms as: co-financing on contractual terms of an investment project with registration of state property rights, directing funds to the authorized capital of legal entities, providing state guarantees (this issue is discussed in more detail in Chapter 21).
The conditions and procedure for the competitive selection and financing of investment projects at the expense of regional budgets are developed by the governing bodies of the constituent entities of the Russian Federation and municipalities.
Project financing in international practice is understood as the financing of investment projects, characterized by a special way of ensuring the return on investment, which is based on the investment qualities of the project itself, the income that the newly created or restructured enterprise will receive in the future. A specific project financing mechanism includes an analysis of the technical and economic characteristics of an investment project and an assessment of the risks associated with it, and the basis for the return on invested funds is the project's income remaining after covering all costs.
A feature of this form of financing is also the possibility of combining various types of capital: banking, commercial, state, international. Unlike a traditional credit transaction, the risk can be dispersed between the participants of the investment project.
Initially, the largest American and Canadian banks were involved in financing investment projects. Currently, this area of activity has been mastered by banks of all developed countries, while the leading positions belong to the banks of Great Britain, Germany, the Netherlands, France and Japan. International financial institutions, in particular the IBRD and the EBRD, actively participate in the financing of investment projects.
Project financing is characterized by a wide range of creditors, which makes it possible to organize consortiums whose interests are represented, as a rule, by the largest financial institutions - agent banks. As sources of financing, funds from international financial markets, specialized export credit agencies, financial, investment, leasing and insurance companies, long-term loans from the International Bank for Reconstruction and Development (IBRD), the International Finance Corporation (IFC), the European Bank for Reconstruction and Development (EBRD) ), the world's leading investment banks.
Financing capital-intensive projects is associated with increased risks. As a rule, the ability of individual banks to lend to such projects is limited, and they rarely take on the risks of financing them.
Parallel (joint) financing includes two main forms:
independent parallel financing, when each bank enters into a loan agreement with the borrower and finances its part of the investment project;
co-financing when a banking consortium (syndicate) is created. The participation of each bank is limited by a certain amount of credit and consortium (syndicate). The preparation and signing of the loan agreement is carried out by the bank manager; further control over the implementation of the loan agreement (and often the implementation of the investment project), the necessary settlement operations are carried out by a special agent bank from the consortium (syndicate), receiving a commission for this.
sequential financing, the scheme involves a large bank - the initiator of the loan agreement and partner banks. A large bank with significant credit potential, high reputation, experienced experts in the field of investment design, receives a loan application, evaluates the project, develops a loan agreement and provides a loan. However, even a large bank cannot finance a number of large-scale projects without worsening its balance sheet. Therefore, after issuing a loan to an enterprise, the initiating bank transfers its claims for debt to another creditor or creditors, receiving a commission, and removes receivables from its balance sheet. Another way of transferring claims by the organizing banks involves the placement of a loan among investors - securitization. The arranging bank sells receivables on the granted loan to trust companies that issue securities against it and, with the help of investment banks, place securities among investors. Funds received from the borrower to repay the debt are credited to the fund for the redemption of securities. At maturity, investors present securities for redemption. Often, the organizing bank continues to service the loan transaction by collecting payments from the borrower.
According to the share of risk assumed by the lender, the following types of project financing are distinguished in banking practice:
with full recourse to the borrower. Recourse means a return claim for reimbursement of the amount of money provided by one person to another. In project financing with full recourse to the borrower, the bank does not assume the risks associated with the project, limiting its participation to the provision of funds against certain guarantees;
with limited recourse to the borrower. In project financing with limited recourse, the lender partially assumes the project risks;
without recourse to the borrower. In project finance with limited recourse, the lender assumes the full risk of the project.
In project financing with limited recourse or without recourse to the borrower, the bank, intervening in the course of the project, indirectly participates in its management. If, when using these schemes, the bank also invests in the capital of the project company, then there is not only control over the implementation of the project, but also direct participation in its management.
The most widespread in world practice is project financing with full recourse to the borrower. This is due to the fact that this form of financing is distinguished by the speed of obtaining the funds necessary for the investor, as well as the lower cost of the loan.
Project financing with full recourse to the borrower is used in the following cases:
providing funds to finance projects of great socio-economic importance; unprofitable and unprofitable projects;
allocation of funds in the form of an export credit, since many specialized export credit structures are able to take risks without additional guarantees from third parties, but provide credit only on such conditions;
providing funds for small projects that are sensitive to even a small increase in costs not provided for in the original calculations.
A fairly common form is project financing with limited recourse to the borrower. With this form of financing, all the risks associated with the implementation of the project are distributed among the participants in such a way that the latter can take on the risks that depend on them. For example, the borrower bears all the risks associated with the operation of the facility; the contractor takes the risk for completing the construction, etc.
Project financing without recourse to the borrower is rarely used in practice. This form is associated with a complex system of commercial obligations, as well as high costs for attracting specialists in the examination of investment projects, consulting and other services. Since in project financing without recourse to the borrower, the lender has no guarantees and assumes almost all the risks associated with the implementation of the project, the need to compensate for these risks leads to a high cost of financing for the borrower. Without recourse to the borrower, projects with high profitability are financed. As a rule, these projects provide for the production of competitive products, such as the extraction and processing of minerals.
Banks involved in the financing of investment projects attract experienced specialists in the examination of investment projects or create specialized units to organize, control and analyze the implementation of projects.
The Bank's work on project implementation in its most general form includes the following stages:
preliminary selection of projects;
evaluation of project proposals;
acceptance of the project for financing;
control over the implementation of the project;
The selection of project proposals is carried out on the basis of their compliance with certain criteria. General information about the project is preliminary assessed, including information about the type of investment project, its industry and regional affiliation, the amount of funding requested, the degree of project development, the availability and quality of guarantees, etc.
After screening out projects that do not meet the criteria, the selected projects are considered in more detail. Such specific characteristics of the project as its prospects, project risks, financial condition of the borrower, etc. are being worked out.
Usually banks do not develop the project. They can assist in the preparation of a package of documents. However, in cases where banks participate in the capital of the project company or provide financial advice in carrying out their functions as a consulting company, they may also take over the development of the project.
The key stage in the passage of the project is the assessment of its investment qualities based on a comprehensive analysis of the feasibility study, business plan and other project documentation. At this stage, project risks are identified, measures are developed to diversify and reduce them, the scheme and terms of financing are selected, the effectiveness of the investment project is assessed and its implementation is managed. Based on the results of the assessment, a decision is made on the advisability of negotiating.
The subject of negotiations between the bank and the borrower is an agreement on the implementation of an investment project and a loan agreement. The financial terms of the loan agreement, as a rule, provide for a grace period for the borrower to repay the debt, since in project financing, the repayment of debt is carried out at the expense of income generated by the project.
The debt repayment scheme may provide for annuity payments, repayment in equal installments of the principal with interest on the balance of outstanding debt, lump sum repayment of the principal amount of the debt, repayment of debt in the form of a fixed percentage for certain periods of time in the form of a given percentage of the net project revenue for a certain period, payment by the borrower only loan interest with the conversion of the principal amount into shares at the end of the loan agreement. The last two options (unlike the previous ones) also mean the use of an investment method of financing, which involves the bank's participation in profits. The project implementation agreement stipulates the bank's commission related to its participation in the preparation and implementation of the project.
The need for bank control over the implementation of an investment project is due to the fact that in project financing, the bank bears significant project risks and, therefore, cannot but interfere in the process of spending the allocated funds, in the course of project implementation. The level of bank risks depends on the adopted project financing scheme, according to which the bank directly or indirectly participates in project management: with full, limited or no recourse to the borrower.
Banks specializing in financing investment projects, upon completion of the project, as a rule, carry out a retrospective analysis, which allows to summarize the results obtained, to determine the effectiveness of the investment project.
For the successful implementation of investment projects in the world practice, various combinations of methods of equity and credit financing, guarantees and guarantees are used.
Among the main models of project financing are the following:
financing for future deliveries of products;
"build - operate - transfer" (build - operate - transfer - HERE);
"build - own - operate - transfer" (built - own - operate - transfer - BOOT).
The financing scheme for future deliveries of products is often used in the implementation of oil, gas and other resource projects. It can be classified as a form of financing with limited recourse to the borrower, backed by contracts that provide for unconditional obligations of the buyer such as "take and pay" (take and pay) and "take or pay" (take or pay) with creditworthy third parties. This scheme involves the participation of at least three parties: creditors (a banking consortium), a project company (a special company engaged in the direct implementation of an investment project), an intermediary company that is a buyer of products. An intermediary company may be established by creditors. The mechanism of action of the scheme under consideration is as follows. The banking consortium that finances the project provides a loan to the intermediary company, which, in turn, transfers the funds to the project company in the form of an advance payment for the future delivery of the last certain quantity of products at a fixed price sufficient to repay the debt. Loan repayments are linked to
cash flows from the sale of supplied products.
In accordance with the BOT scheme, on the basis of obtaining a concession from state bodies, a group of founders creates a special company whose responsibilities include financing and organizing the construction of the facility. After completion of the work, this company receives the right to operate or own the facility. The state can promote the implementation of an investment project by concluding a contract for the purchase of an object at a fixed price or an option transaction, providing guarantees to a bank lending to the project.
The organization of financing an investment project on BOOT terms is somewhat different from the BOOT model, as it involves obtaining a license from the state on the basis of franchising by a special company and combining financing with limited recourse with financing of this company under a government guarantee. Under the BOOT scheme, the project company (operating company), acting as a concessionaire, is responsible for the construction, financing, management and maintenance of the investment activity object for a specified period (20, 30 or more years), after which the object is transferred to the state (or a structure authorized by the state ). During the concession period, the project company (operating company) receives income from the operation of the facility, covering the costs of financing the investment project (including the costs of servicing loans), managing and repairing the facility and making a profit.
When using the BOOT and BOOT schemes, the distribution of project risks between the participants (a special contractor company, a creditor-bank or their group and the state), fixed in a concession agreement or a franchise agreement, ensures the mutual interest of the project participants in its timely and effective implementation.
The attractiveness of these schemes for the state is due to a number of circumstances:
the state, playing an important role in the implementation of the project, does not incur costs, which minimizes the impact on its budget;
after a certain time, determined by the period of concession or franchising agreement, the state receives ownership of the operating facility;
the use of the competitive selection mechanism, the switching of financing to the private sector due to its higher efficiency allows to achieve greater results;
stimulation of the influx of high technologies, foreign investment, achieved through the use of these schemes, allows solving nationally significant economic and social problems.
Project finance can be an effective and efficient financial instrument for long-term investment projects related to capital-intensive sectors of the economy.
1. Modern domestic developments in the field of methods for evaluating the effectiveness of investments are based on principles widely used in world practice. Among them: consideration of the project throughout its life cycle; comparability of conditions for comparing different projects (project options); estimate the return on investment based on the indicators of cash flows associated with the project; taking into account the time factor; the principle of positivity and maximum effect; choice of discount rate; taking into account the presence of different project participants and the discrepancy between their interests; taking into account the most significant consequences of the project; comparison "with the project" and "without the project"; multi-stage evaluation; taking into account the impact of inflation; taking into account the impact of uncertainty and risks; taking into account the need for working capital.
2. In accordance with the standard methodology, the following types of investment project efficiency are distinguished: the effectiveness of the project as a whole; effectiveness of participation in the project. The effectiveness of the project as a whole includes the social (socio-economic) effectiveness of the project and the commercial effectiveness of the project. The effectiveness of participation in the project includes: the effectiveness of the participation of enterprises in the project; the effectiveness of investing in the company's shares; regional and national economic efficiency; industry efficiency; budget efficiency.
3. The cash flow of the investment project is formed by cash receipts (inflows) and payments (outflows) during the implementation of the investment project, which depend on the time of the settlement period. It includes cash flows from investing, operating and financing activities.
4. The financial feasibility of an investment project is understood as ensuring such a structure of cash flows, in which at each calculation step there is a sufficient amount of money to implement the project. Evaluation of the effectiveness of investment projects is based on a comparison of inflows and outflows of funds associated with its implementation, which involves a discounting procedure - bringing the values of multi-temporal cash flows to their value at a certain point in time using the discount rate. There are the following discount rates: commercial, project participant, social, budgetary
5. Criteria for evaluating investment projects determine the measure of the integral effect obtained as a result of the implementation of the investment project, and also characterize the ratio of expected income from investment investments and the costs of their implementation. They are divided into two groups: based on accounting estimates and based on discounting. The first group corresponds to simple or simple methods that involve the use of accounting indicators (net income, return on investment, payback period, profitability indices, maximum cash outflow), the second - complex methods or methods based on discounting, where the criteria indicators are: net discounted income, discounted return indices, internal rate of return, discounted payback period, discounted maximum cash outflow.
6. The most important condition for an objective assessment of the effectiveness of investment projects is to take into account uncertainty and risk. Uncertainty is the incompleteness and inaccuracy of information about the conditions for the implementation of the project, risk is the possibility of such conditions that will lead to negative consequences for all or individual project participants. In order to assess the sustainability and effectiveness of the project under conditions of uncertainty, methods of integrated assessment of sustainability, calculation of break-even levels, and variation of parameters are used.
7. The method of financing an investment project is understood as a method of attracting investment resources in order to ensure the financial feasibility of the project. The main methods of financing investment projects are: self-financing, corporatization, as well as other forms of equity financing; credit financing (investment loans of banks, issue of bonds); leasing; budget financing; mixed financing (based on various combinations of these methods); project financing.