For investors considering Public-Private Partnerships (PPPs), mastering Financial Due Diligence for PPP Investors is not merely a procedural step but a critical safeguard, absolutely essential for accurately assessing project viability, identifying hidden risks, and making informed investment decisions in complex, long-term infrastructure and public service ventures. Given the significant capital commitments, intricate contractual structures, and diverse risk profiles inherent in PPPs, rigorous financial due diligence provides an indispensable independent verification of the project's financial health, assumptions, and projections, thereby protecting investor capital and ensuring alignment with investment objectives. This comprehensive training course is meticulously designed to equip financial analysts, fund managers, private equity professionals, and investment bankers with the advanced knowledge and practical skills required to conduct thorough financial due diligence on PPP projects, enabling them to scrutinize financial models, evaluate revenue and cost forecasts, assess financing structures, and identify key commercial and financial risks that impact returns. Without meticulous Financial Due Diligence for PPP Investors, potential capital providers risk mispricing assets, overlooking critical liabilities, and committing funds to unsustainable projects, underscoring the vital need for specialized expertise in this critical domain.

Duration: 10 Days

Target Audience

• Private Equity and Infrastructure Fund Professionals
• Investment Bankers and Financial Advisors
• Commercial and Development Bank Credit Analysts
• Project Developers and Sponsors (to understand investor expectations)
• Financial Analysts and Modellers
• Fund Managers and Portfolio Managers
• Accountants and Auditors involved in transaction advisory
• Legal Professionals (to understand financial implications)
• Risk Managers in investment firms
• Anyone involved in the investment appraisal and acquisition of PPP projects

Objectives

• Understand the strategic importance of financial due diligence for PPP investors.
• Learn about the scope and methodology of financial due diligence in PPP transactions.
• Acquire skills in critically analyzing PPP financial models and underlying assumptions.
• Comprehend techniques for evaluating revenue streams and demand forecasts from an investor's perspective.
• Explore strategies for assessing project costs, capital expenditure, and operating expenses.
• Understand the importance of scrutinizing financing structures and debt covenants.
• Gain insights into identifying and quantifying key financial and commercial risks.
• Develop a practical understanding of tax, accounting, and regulatory implications for investment.
• Master valuation methodologies relevant to PPP assets.
• Acquire skills in preparing comprehensive financial due diligence reports.
• Learn to apply international best practices in investor due diligence.
• Comprehend techniques for managing the due diligence process efficiently.
• Explore strategies for identifying red flags and mitigating potential deal breakers.
• Understand the importance of post-acquisition financial monitoring.
• Develop the ability to make informed and robust investment decisions in PPPs.

Course Content

Module 1: Introduction to Financial Due Diligence for PPPs

• Definition and purpose of financial due diligence (FDD) in PPP investment.
• Why FDD is critical for long-term PPP projects.
• Scope and objectives of an investor's FDD.
• Distinguishing FDD from other due diligence streams (legal, technical, commercial).
• Overview of the FDD process and key stages.

Module 2: Understanding the PPP Contract and its Financial Implications

• Deep dive into the concession/PPP agreement from a financial perspective.
• Identifying key financial clauses: payment mechanisms, revenue allocation, termination compensation.
• Understanding risk allocation and its financial consequences.
• Review of contractual guarantees and support mechanisms.
• Impact of contract terms on cash flow predictability and investor returns.

Module 3: Scrutinizing the Financial Model

• Best practices for financial model structure and integrity.
• Stress testing model robustness and flexibility.
• Reviewing key model assumptions (inflation, discount rates, FX).
• Identifying hidden errors, circularities, and inconsistencies.
• Verifying calculations for key outputs (IRR, NPV, DSCR).

Module 4: Revenue Stream Analysis and Demand Risk Assessment

• Detailed analysis of revenue sources (e.g., tolls, availability payments, user fees).
• Critical review of demand forecasts (traffic studies, population growth, usage patterns).
• Assessing sensitivity of revenues to demand fluctuations.
• Evaluating the robustness of revenue risk mitigation mechanisms (e.g., MRGs).
• Independent validation of revenue projections.

Module 5: Capital Expenditure (CAPEX) and Operating Expense (OPEX) Review

• Detailed audit of historical and projected CAPEX.
• Assessment of construction cost estimates and contingencies.
• Review of operational and maintenance cost assumptions.
• Benchmarking costs against comparable projects.
• Identifying potential cost overruns or hidden operational liabilities.

Module 6: Financing Structure and Debt Review

• Analysis of the existing and proposed debt structure (senior, subordinated, mezzanine).
• Review of loan agreements, inter-creditor agreements, and security documents.
• Scrutiny of debt covenants, repayment profiles, and interest rate hedging.
• Assessing the terms and conditions of government support or guarantees.
• Understanding lenders' direct agreements and step-in rights.

Module 7: Equity Structure and Shareholder Returns

• Analysis of equity contributions and shareholder loans.
• Review of shareholder agreements and joint venture agreements.
• Assessment of projected equity returns (Equity IRR, NPV).
• Understanding dividend policies and cash sweep mechanisms.
• Evaluating the terms of any sponsor support or equity undertakings.

Module 8: Tax, Accounting, and Regulatory Implications

• Review of applicable tax laws (corporate income tax, VAT, withholding tax).
• Analysis of tax holidays, incentives, and exemptions.
• Understanding the project's accounting policies and their impact on financials.
• Assessment of compliance with relevant regulatory frameworks.
• Identifying potential tax exposures or accounting discrepancies.

Module 9: Risk Identification and Quantification (Financial Perspective)

• Identifying key financial risks: market risk, credit risk, liquidity risk.
• Commercial risks: demand risk, operational risk, completion risk.
• Political and regulatory risks with financial consequences.
• Quantifying potential financial impacts of identified risks.
• Review of risk mitigation strategies in the contract and financing documents.

Module 10: Valuation Methodologies for PPP Assets

• Discounted Cash Flow (DCF) valuation for PPP projects.
• Equity valuation methodologies (e.g., Equity IRR, dividend discount model).
• Sensitivity analysis on valuation drivers.
• Comparing valuation results with market benchmarks.
• Understanding key assumptions impacting valuation.

Module 11: Market Analysis and Benchmarking

• Assessment of market conditions relevant to the project (e.g., sector trends, competition).
• Benchmarking project costs, revenues, and returns against industry comparables.
• Analyzing the competitive landscape and market positioning.
• Understanding the regulatory environment and its stability.
• Identifying potential market disruptions.

Module 12: Due Diligence Process Management

• Planning and scoping the FDD engagement.
• Data room management and information requests.
• Interacting with target management, project advisors, and legal counsel.
• Managing the FDD timeline and deliverables.
• Integrating FDD findings with other due diligence streams.

Module 13: Red Flags and Deal Breakers

• Identifying common red flags in PPP financial due diligence.
• Indicators of potential fraud or misrepresentation.
• Recognizing unsustainable financial structures or unrealistic assumptions.
• Spotting critical contractual gaps or unfunded liabilities.
• Strategies for addressing or walking away from deal breakers.

Module 14: Reporting and Presenting FDD Findings

• Structure and content of a comprehensive FDD report.
• Executive summary for key investment decision-makers.
• Highlighting key findings, risks, and recommendations.
• Quantifying potential financial impacts of risks.
• Presenting FDD results clearly and concisely.

Module 15: Post-Acquisition Financial Monitoring and Value Creation

• Implementing post-acquisition financial monitoring frameworks.
• Tracking actual performance against FDD projections.
• Identifying opportunities for post-acquisition value creation.
• Ongoing risk management and contractual compliance.
• Learning from FDD outcomes for future investment decisions.

Training Approach

This course will be delivered by our skilled trainers who have vast knowledge and experience as expert professionals in the fields. The course is taught in English and through a mix of theory, practical activities, group discussion and case studies. Course manuals and additional training materials will be provided to the participants upon completion of the training.

Tailor-Made Course

This course can also be tailor-made to meet organization requirement. For further inquiries, please contact us on: Email: info@skillsforafrica.org, training@skillsforafrica.org Tel: +254 702 249 449

Training Venue

The training will be held at our Skills for Africa Training Institute Training Centre. We also offer training for a group at requested location all over the world. The course fee covers the course tuition, training materials, two break refreshments, and buffet lunch.

Visa application, travel expenses, airport transfers, dinners, accommodation, insurance, and other personal expenses are catered by the participant

Certification

Participants will be issued with Skills for Africa Training Institute certificate upon completion of this course.

Airport Pickup and Accommodation

Airport pickup and accommodation is arranged upon request. For booking contact our Training Coordinator through Email: info@skillsforafrica.org, training@skillsforafrica.org Tel: +254 702 249 449

Terms of Payment: Unless otherwise agreed between the two parties’ payment of the course fee should be done 7 working days before commencement of the training.