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Innovation driving project finance market

16 July 2009

Innovation is driving new life into the project finance sector as Governments, companies and funders look at new ways to get deals off the ground post the global credit crunch.

'Project financing remains hard to come by despite some brightening of the global economic gloom, and it's likely what we will see in the next 12 months in the Asia-Pacific is increasing innovative structures being used,' said Allens Arthur Robinson (Allens) Banking & Financial Services Practice Group Leader Simon Lynch.

For the first half of 2009, Allens advised on project finance deals worth US$1.140 billion (A$1.452 billion), capturing 44.6 per cent of the Australasian market share, and was the only non-Indian law firm to rank in the top 10 Asia-Pacific firms according to data just released by Dealogic.

Project Finance Partner Phillip Cornwell said there were already a number of examples of new approaches emerging.

'In the case of the South-East Queensland Schools Public Private Partnership (PPP), which we acted on, the novel financing used involved the first use of the 'supported debt model' developed by Queensland Treasury,' said Mr Cornwell. 'Just 18 months ago, when credit and funding were plentiful, deals often took a fairly similar approach. What clients want now is not just advice on what's happened before but ideas on how a project financing structure can be done for the first time and that's providing a unique and enjoyable challenge.'

Deals that Allens was involved in during the last six months include:

  • The highly innovative A$240 million South-East Queensland Schools PPP;
  • US$203 million La Trobe University Biosciences Research Centre PPP;
  • M2 Hills Motorway's A$465 million refinancing;
  • A$480 million refinancing of the Dampier to Bunbury Natural Gas Pipeline; and
  • Broadcast Australia's A$440 million refinancing.

'In the domestic Australian market, where infrastructure projects are expected to dominate the project finance horizon, knowing and understanding novel and innovative approaches to financing these projects will be critical,' added Mr Cornwell.

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Founded in 1822, Allens Arthur Robinson offers one of the most comprehensive legal networks in Australia and Asia with more than 1500 personnel based in 14 cities and eight countries across the region. Clients voted Allens Arthur Robinson the Best Professional Services Firm (revenue over $200 million) and Best Law Firm (revenue over $100 million) in the annual BRW Client Choice Awards 2005, 2006 and 2008. We have been an EOWA Employer of Choice for Women since 2004.