Financing compound feed plants involves a professional approach to financial modeling, choosing capital sources, negotiations, project management and other aspects. In recent years, the growing strategic role of project finance in the animal feed industry has spurred the development of research and the emergence of new models aimed at off-balance sheet financing with high financial leverage.
The development of compound feed production in the face of growing competition requires continuous improvement in all aspects, including financing, engineering services, as well as serious organizational and marketing efforts at all stages of the particular project.
In recent years, the growing strategic role of project finance in the animal feed industry has spurred the development of research and the emergence of new models aimed at off-balance sheet financing with high financial leverage. A well-thought-out strategic plan also plays a big role in the choice of sources and models of financing for the construction or modernization of a compound feed plant.
Viola Funding Limited offers financing for compound feed plants, including project finance schemes and other feed industry facilities.
The complexity of organizing project finance (PF) schemes involves a long period of preparation, as well as the need for a wide range of engineering, financial and legal services of various companies involved in project.
Financing for compound feed plants: characteristics, stages and risks
Unlike other methods of business financing, PF forms a comprehensive system that combines all aspects of project development. Project finance is a complex integrated activity that combines organizational, legal, financial and engineering aspects.
The predominant trend in project finance in industrialized countries is the use of a wide range of sources and methods of financing investment projects, including long-term bank loans, securities issues, equity contributions, corporate loans, bond loans, financial leasing and internal resources (including depreciation funds and retained earnings).
Project finance of compound feed plants consists of the following stages:
• Project implementation phase, including the creation of a project company (SPV), tenders, procurement of equipment and execution of works.
• Stage of preparation and development of the project, which actually means the design of the idea in the form of funding schemes, organization, engineering solutions etc.
An industrial company is a full participant in PF schemes for compound feed plants.
General characteristics of project finance include the following:
•Development of a new investment project or complete modernization of an existing facility. • High share of external financing, which in some cases reaches 90% of the total project cost. • Ensuring adequate debt repayment using project-generated cash flows. • The income of creditors comes from future profits, not from current assets of the company.
• The main guarantees of debt repayment are contracts, licenses and / or patents issued to the project company. In particular, technical licenses or various property rights.
• Limited project life cycle: compound feed plant usually has a long life cycle, while funding is attracted by participants according to an agreed schedule, including changes in the rights of participants at different stages of the life cycle.
We offer our corporate clients flexible schemes for long-term lending, project finance, as well as guarantees and project support.