International financing viola-funding October 20, 2023

International financing

International financing of large-scale projects
International financing of large-scale projects

Since the end of the twentieth century, the world economy has been developing under the influence of globalization, which establishes modern rules for building an interconnected, deeply integrated world. International financing of large-scale projects is closely related to the cross-border flows of goods, raw materials, labor, financial resources and information, which initiate radical changes in all national economies.

The architecture of the world economy has changed significantly in recent years thanks to the liberalization of foreign trade, the development of the international financial market and the fragmentation of international production. Multinational corporations are now becoming the driving force behind economic development, and international project financing has become a common practice for big business.

The implementation of numerous international investment projects around the world is accompanied by the rapid development of markets and an increase in the share of exports in the gross domestic product of developed countries.

VIOLA FUNDING LIMITED offers a wide range of advanced instruments for international financing of large projects, including investment loans, project finance (PF), corporatization, financial leasing and much more. The geography of our services covers almost the whole world, including the European Union, the USA, Latin America, Russia and the CIS, North Africa, the Middle East, as well as South Asia, East Asia and China.

International financing of large-scale projects, including advanced project finance tools, takes an increasing share in industries as energy. chemical industry, mechanical engineering, oil and gas projects and many more.

Instruments for international financing of large-scale projects

Sources of international financing for large-scale projects fall into two broad categories. Equity financing consists in obtaining financing through an increase in capital, that is, the issue of new shares. 

Multinational corporations or companies operating overseas, as opposed to companies operating only in the local or domestic market, tend to have a significant need for resources.

Attracting affordable sources of debt financing for business development abroad helps to increase the return on equity.

According to the Alliance for Financial Inclusion (AFI), paying off debt forces managers to be more disciplined, which contributes to the overall efficiency of managing specific business projects.

However, the most common way to increase the capital of a multinational corporation is the issue and placement of shares on international markets. The characteristics of this source are described below.

International project finance instruments

A long implementation period (usually up to 20-30 years), as well as the use of the generated financial flows of the project for servicing debt.

The off-balance nature of project finance (the project’s debt is not reflected in the financial statements of the initiator) facilitates the implementation of ambitious projects by small companies that are unable to provide sufficient collateral to obtain loans. In this case, funds are provided against the future cash flows of the project, regardless of the assets of the initiator.

Increased investment in infrastructure and the tendency of governments to reduce their budget deficits have become fundamental factors in the development of project finance around the world.

This funding model allows governments and private companies to jointly complete risky and costly projects, often through public-private partnerships (PPPs).

VIOLA FUNDING LIMITED specializes in organizing project finance schemes in the EU and beyond.

Our team is ready to attract debt financing for a large project in any country in the world. The geography of our services covers dozens of countries in Europe, North America, Latin America, Africa, the Middle East and East Asia.

What to consider when choosing international financing

A professional project analysis enables companies to make informed decisions, select the best financing possible and therefore helps to maximize the value of the project.

A certain problem is presented by situations when an investment project is being implemented in emerging markets, where the financial system is underdeveloped and, therefore, access to financing is limited.

Companies can also turn to structures created by international organizations and governments that offer financial support to launch projects in various countries. Examples of such structures are the European Investment Bank or the World Bank, as well as a number of national structures such as ICEX in Spain.

It is important for project initiators to determine the type of financing (equity, debt and combined) that is most suitable for a specific investment project and company.

Some countries also impose limits on the debt of foreign companies, and this fact may determine the choice of the structure of financing investment projects in these countries.

Our professional team is ready to provide a full range of legal and financial services for clients planning investment projects anywhere in the world.

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