Infrastructure Project Lifecycle
Independent market analysis1 indicates that it typically takes between two and three years from project conception, through to when a project reaches financial close (see diagram below). Timelines can increase significantly for higher risk projects, or proponent led projects, such as those in which NAIF is involved.
It is important that any project in which NAIF participates has robust feasibility and planning. The success of an infrastructure project relies on ensuring the foundations for each project have been laid well. NAIF thoroughly analyses all eligible projects to ensure the best use of taxpayers money. Where required, it will draw on external experts to assist.
Detailed due diligence is best practice in the financing of infrastructure assets which, as long term assets, often require long term financial structures to be in place. The ability of a project to gain and finalise the required government approvals can also impact a project’s timeline.
NAIF’s enabling legislation provides for a proponent-led approach to project origination, development and financing. NAIF also seeks to encourage other debt providers, meaning that NAIF works on timeframes that are driven by the proponent, and any other debt financiers.
NAIF can facilitate an indication of early support for a project through a number of different methods including a letter of support, an indicative term sheet and a conditional Investment Decision.
Typical infrastructure project to financial close
Ernst & Young 2017