Project finance is the financing of capital-intensive projects such as hospitals, roads, canals, ports, power projects, mining projects, oil and steel projects comes under project financing. In the project finance situation, the borrower is a special purple vehicle, and the  SPV only owns the project which has been financed. If you compare this with corporate finance, there remains a whole company in corporate finance with numerous assets and business lines that are different from each other.

Neef for infrastructure project financing

Another difference between the project and corporate finance is how the lenders will be repaid. It’s typically from the money generated from the project, and if the money is not generated, then the lenders will not be repaid. So it’s very important from a lender’s perspective to have a technical and economic evaluation of money that the project will raise. Lenders and their advisors will need to be very clear about what the project would earn. These infrastructure project financing can be quite capital intensive. They do involve a large element of construction and engineering that has taken place before a project is making any money

In corporate finance, you will be lending a top-level company where you lend to a very special discrete vehicle with a single asset in project finance.