We join the Amsterdam Institute of Finance for a hands-on programme in Project Finance, taught by Professor Pierre Hillion of INSEAD Singapore. A view from the classroom:

One way of looking at project finance is by thinking of it as an iceberg with most of the mass under water. Beneath the visible surface of say a skyscraper or a giant wind farm is an entire infrastructure of contractors, suppliers and financiers. Making the whole machine fit together is a complex financial infrastructure of careful planning and calculations. This is no mean feat to accomplish, so the Amsterdam Institute of Finance offers an intensive programme on Project Finance to equip financial professionals and project managers with the necessary skills.

“No better time than now: the many transitions we face require highly skilled financial expertise.”

Professor Pierre Hillion (INSEAD)

The participants of the programme fall roughly into two categories. On the one hand, there are the financial people working for the banks and funds that have to provide the financial backing for large scale projects. On the other hand, there are the professionals usually found on the other side of the table: the ones who utilise the provided capital for their projects. People e.g. like real estate developers or energy infrastructure engineers who have reached a level of seniority in their careers where they have to have a firm grasp of project finance in order to effectively manage their responsibilities. Professor Pierre Hillion is in charge of this learning experience. Hillion is usually found in the Singapore faculty of the world renowned INSEAD business school, but he has been with the Amsterdam Institute of Finance from the start, flying in to teach a variety of programmes. His popularity with the participants and consistently high ratings are based on the energetic and directive way in which Hillion guides the participants through the often dense and complicated subject matter.

“Many roads lead to Rome, the trick is to pick the shortest and least expensive one.”

Dynamic models
One gets a sense that the trick in project finance is to add another dimension of thinking about finance. Rather than viewing a project in terms of a budget in a two dimensional sense (with money on axis and various in- and outgoing items), the participants are encouraged to add the dimension of time to their calculations, integrating aspects like projected revenues and the projected costs of capital. The point is not to construct a static model, but a dynamic system that responds to the challenges and opportunities of the circumstances. Hillion illustrates this point by looking at the interest rates paid on the borrowed capital. Is the interest to be added to the principal sum or to be paid directly? And if so, should that interest be paid from cash flow or from the cash put up by the borrower? And, Hillion points out, this has often to do with practices in the market. Banks tend to want interest payments up front when investing in risky, unproven technology, whereas they are much more willing to add to the principal or take payment from cashflow when replicating a well-known business model. All of this is to say that many roads lead to Rome, and the task of the responsible manager is to pick the shortest and least expensive one, based on a sound understanding of the financial instruments available and the practices in the market.

There’s probably no better moment than now to join the programme, since we’re on the brink of one the largest collective challenges ever in the shift towards renewable energy, combined with large-scale projects for climate adaptation. Understanding the financial needs of this transition is paramount for the financial professional. And where better to learn the ropes in Amsterdam, a city with a finance ecosystem that has for centuries been at the forefront of financing transformative projects. Programmes take place in the city centre, providing ample opportunities to explore the city in the off hours. It’s also a great opportunity to reach out and connect with professionals in the open and dynamic financial industry of Amsterdam. What’s more, participating in the programme grants access to the AiF Alumni Network, a community of finance professionals with members all over the world.

Learn how to structure, finance and value large capital projects. Build and sustain successful PPPs. Join ambitious professionals for the challenging 4-day Project Finance and PPPs program by Professor Pierre Hillion (INSEAD) at Amsterdam Institute of Finance. Learn more & reserve your place here.

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