project Mozal
Financing the Mozal Project
Table of Content
1
Introduction .................................................................................................................................... 3
2
Project Valuation ............................................................................................................................ 4
2.1
2.2
3
Should Alusaf/Gencor invest in the Mozal Project? ............................................................... 4
What are the greatest risks? Have they been adequately addressed? ...................................... 8
The Role of the IFC ........................................................................................................................ 9
3.1
How does IFC involvement affect the deal? ........................................................................... 9
3.2
Will the IFC and the sponsor (Alusaf and IDC) share similar objectives? ........................... 10
3.3
Should IFC play an advisory role or should it also make an investment in Mozal? ............. 10
3.4
As an IFC board member would you approve the recommended investment in Mozal? ...... 11
3.5
What is the IFC’s competitive advantage? ............................................................................ 12
3.6
To what extent does the IFC do something that is unique, valuable and sustainable? .......... 12
4
Conclusion .................................................................................................................................... 13
5
References .................................................................................................................................... 15
2
1
Introduction
In the last forty years, a new source of financing has gained more and more popularity, the so called
Project Finance. Under project finance, a new legally independent project company is created which is financed with equity coming from the sponsors on the one side and – what is much
Table of Content
1
Introduction .................................................................................................................................... 3
2
Project Valuation ............................................................................................................................ 4
2.1
2.2
3
Should Alusaf/Gencor invest in the Mozal Project? ............................................................... 4
What are the greatest risks? Have they been adequately addressed? ...................................... 8
The Role of the IFC ........................................................................................................................ 9
3.1
How does IFC involvement affect the deal? ........................................................................... 9
3.2
Will the IFC and the sponsor (Alusaf and IDC) share similar objectives? ........................... 10
3.3
Should IFC play an advisory role or should it also make an investment in Mozal? ............. 10
3.4
As an IFC board member would you approve the recommended investment in Mozal? ...... 11
3.5
What is the IFC’s competitive advantage? ............................................................................ 12
3.6
To what extent does the IFC do something that is unique, valuable and sustainable? .......... 12
4
Conclusion .................................................................................................................................... 13
5
References .................................................................................................................................... 15
2
1
Introduction
In the last forty years, a new source of financing has gained more and more popularity, the so called
Project Finance. Under project finance, a new legally independent project company is created which is financed with equity coming from the sponsors on the one side and – what is much
References: Damodaran, A. (2006). Damodaran on Valuation. 2nd edition. John Wiley & Sons, Inc. Hobocen, New Jersey Esty, B.C. (2003). The Economic Motivation for Using Project Finance. Working paper. Kleimeier, S. and Versteeg, R. (2010). Project Finance as a driver of economic growth in low-income countries. Review of Financial Economics, 19, 49-58. Ross. A, Westerfield, W. & Jaffe, J. (2005). Corporate Finance. McGraw-Hill/Irwin, New York. 15