Completed notes of the course

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Financing Complex Projects 201-2022 Lecture Notes 1 LECTURE 1: Why infrastructuresare an attractive asset for investor? Infrastructuresare long term (more or less 10 years) with long economiclife with stable (stability means no volatility, so forecasting more easy and precise) and predictableoperating CF (financial perspectivethat considersonly financial cash values, no D&A, no EBIT or EBITDA; we consider only CASH FLOW), with low technologicalrisk (it9sa mature market where the uncertaintyon investment costs, risks etc is lower; and there is not so much new technology required). Provisionof key public services. Strongly non−elasticdemand (the demand in this sector is rigid, meaning that the price can increases withouta shirk in the demand → retta price−quantityvertical,if the price increasesor decreasesthe q remains the same). Typically the market is a monopoly or near−monopoly(one player only, and the efficiency is higher because of that), this is also linked with high entry barriers (huge investment, law, concessions&). The assets in this market is regulatedby government because there is only one player and the product is essential so the price can be increasedby infinite (usually the price is determined by governments and it9sa fair price for consumers and fair and stable remuneration for owner). Frequent natural hedge against inflation (if there is a strong inflation the price is adjusted and so the investment is protected; in particularin the operational phase, when the infrastructureis already done). Low correlation with traditional asset classes. Higher return respect to government bonds (10−15−20years term), thanks to a lower interestrate. How to finance infrastructuredevelopment?Large size compared to assets in place, high risk/high return profile, high…