Definition of Project Finance

Electricity generation project finance is one of the required activity in target setting based on Financial Sector’s SBT Guidance (2022.2). According to the guidance (P137), Project finance is defined as equity or loan (including mezzanine debt) with known use of proceeds that are designated for a clearly defined activity or set of activities.

As most FIs’ asset only consist of loans to project finance in practices, I would like to clarify that if both “equity investment” and “loan” to a project finance shall be included in the target.

If it is, could anyone please provide some examples on project finance equity investment?

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Hi Angela,

Thanks for reaching out.

Both equity investments and loans to project finance shall be included. I think one example could be where an FI provides equity financing to a special purpose vehicle or joint venture that is set up for a project.

Thanks,
Howard