Seaport and maritime project financing viola-funding August 13, 2023

Seaport and maritime project financing

In recent years, the concept of financing a seaport has undergone profound changes, driven by the growing costs of building, maintaining ports and terminals against the backdrop of rapid progress and growing competition. Commercial ports around the world are currently seeking new financing opportunities, using advanced technology and financial models to improve their efficiency and competitiveness. Shipping companies are no longer able to include multimillion-dollar infrastructure spending in their financial plans, so the industry needs fresh solutions. The variety of ways of the construction and Commercial seaports project financing varies widely, ranging from full self-financing to the widespread use of external sources of financing in the form of bank lending and various project finance (PF) instruments.

Viola Funding Limited, offers financing for commercial seaport projects in Europe, USA, Canada, Latin America, China, Russia, South and East Asia, Australia, the Middle East and other regions.

Together with our high net worth angel investors, we guarantee a comprehensive customized approach to each investment project. We offer loans of 100 million euros or more with a maturity of up to 20 years.

We also use combined project finance (PF) instruments to implement large projects without risking the originator’s assets.

Project finance for the construction of commercial seaports

Project finance has been around since the end of the 13th century, but it only became widespread after the 1930s, when banks and other financial institutions began providing unsecured long-term loans for oil and gas projects or other projects with significant growth prospects.

This has had a positive impact on funding requirements and the availability of borrowed funds, which is why the beginning of the 21st century was the heyday of the era of project finance.

The nature of project finance is close to the nature of infrastructure projects, therefore PF instruments are considered the most suitable for financing the construction of seaports.

Benefits of project finance for seaports and terminals

Project finance as tools provide a lot of advantages for participants in the process, allowing them to quickly implement capital-intensive projects with minimal risk.

Project finance deals are more complex than bank lending. The variety of risks, along with the need to identify and analyze them, pose many challenges to asset security. This, in turn, results in a high cost of borrowed funds compared to alternative financial instruments.

In order to receive funds to cover investment costs, sponsors must create an appropriate security package for subsequent stages of the project, approved by investors and lenders. The main measures in this context are government guarantees, bank guarantees, third party guarantees, guarantees against political risk, long-term contracts for the provision of logistics services, insurance, etc. Our company widely uses financial engineering tools to ensure project financing.

Inherent characteristics of project finance include ensuring that the project has sufficient financial flows that provide a realistic opportunity to service the debt according to the payment schedule.

Financing a commercial seaports project, especially when compared to other financing methods, requires an integrated risk management.

Commercial seaports project financing

                                       Commercial seaports project financing; loans for port modernization

The effectiveness of project finance is highly dependent on the estimated cost of the project. The higher the cost, the greater the chances of getting a positive effect as a result of using PF. For this reason, project finance is only applicable for the construction of large seaports and terminals.

Applicable structures of project finance for Maritime and seaports

After achieving the goal of the project, which is the construction of port infrastructure and the purchase of new equipment, a special project company must pay off the debts, after which it can cease to exist. The organizational form of an SPV may differ from project to project.

The advantages of using project finance instruments for the construction and modernization of the port (port infrastructure) are due to the special organizational structure associated with the special purpose vehicle, SPV / SPE.

Regardless of the chosen form of SPV, financing the construction of seaports through a special project company gives initiators a number of advantages by separating their core activities from the risks and debts of a new capital-intensive project.

Finally, project finance in the context of the construction of seaports and terminals is intended to organize close cooperation of many participants, which makes it possible to make optimal use of the knowledge and experience of each of them.

If you need professional advice on the project finance, please contact us

Funding seaports and terminals; current trends

The key modern trend in financing projects for the construction and modernization of seaports in Western Europe is the transfer of contracts and ownership of port infrastructure from state entities (governments, municipalities) to private capital, which has proven to be effective in the implementation of such projects in a competitive environment.

In order to ensure that the port infrastructure does not lose its public character and develop in accordance with the general directions of the state’s economic policy, financing mechanisms based on public-private partnerships began to gain popularity in the construction or expansion of port infrastructure.

Development of port infrastructure financing models

Attempts to combine the advantages of both sectors are increasingly being undertaken in strategic areas previously under government monopoly, such as airports, seaports and railways.

In the near future, experts expect an increase in support for investments in the construction and modernization of seaports from the funds of the European Union.

In a number of countries, pressure is now mounting to attract private capital to finance infrastructure investment in port areas.

With this financing model, the private investor takes on the entire investment burden.

In addition, a public-private partnership project may involve the use of a mixed model, in which the public and private parties share the costs of financing the seaport and terminals project.

Financing the construction and modernization of commercial seaports; our main service

If you are interested in the construction of seaports or you need long-term financing for large infrastructure projects, contact Viola Funding Limited

Our company is ready to organize financing of large projects, advise your specialists and provide other services.

Our professional services include the following:

• Financing of projects of seaports and port infrastructure. • Services in the field of financial modeling and investment engineering. • Operation and management of facilities.• Project management, etc.

Viola Funding with the help of our high net-worth angel investors financing, construction and modernization of the port infrastructure under the EPC contract.

Contact us to learn more

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