-
86% of industry experts predict an increase in project finance transactions globally
-
North America to See Largest Increase in Activity, New Global Study Commissioned by CSC Finds
-
The most active sectors are renewable energy, followed by infrastructure, oil and gas, and real estate development.
-
Among renewable energy projects, the solar sector is expected to see the largest increase in contracts, followed by wind, fuel cells and green hydrogen.
WILMINGTON, Delaware, September 03, 2024–(BUSINESS WIRE)–An overwhelming majority (86%) of industry experts believe that project finance as a method of financing large-scale infrastructure projects will become increasingly popular over the next two years, according to a major new global study.1 sponsored by CSC, the world’s leading provider of global business administration and compliance solutions.
North America, which benefits from the Inflation Reduction Act (IRA), is expected to see the largest increase in project financing over the next two years, according to more than a third (39%) of respondents.
At the sector level, renewable energy projects, including wind and solar, are the most active, and are the main focus for over half (55%) of respondents. This is followed by infrastructure, including roads, bridges and airports (29%). Within renewables, solar is expected to see the largest increase in contract numbers over the next 24 months.
The Project Finance Report 2024 CSC’s report focuses on the outlook for project finance deal activity across regions and sectors globally. The findings are based on the views of industry professionals specializing in project finance in North America, Europe, the UK, Latin America and Asia Pacific (APAC), and working in sectors such as banking and finance, development and construction, and power and energy.
Read more
Interestingly, as the report’s findings show, CSC has observed a recent increase in the flow of contracts related to project finance.
“We are seeing renewed momentum in project finance transactions across markets as pandemic-related headwinds fade and regulatory and legislative changes take hold,” said Bryan Gartenberg, Managing Director of CSC. “The growing urgency to invest in renewable energy infrastructure, coupled with global demographic shifts and rising prosperity, is driving demand for project finance, creating new opportunities and challenges for market participants.”
Regional growth
While deal growth is expected across all regions studied, North America is expected to be the most dynamic. This is due in part to the IRA Act, although Export Credit Agencies (ECAs) are also seen as key to driving project finance sponsorship and attracting institutional investors.
North America is followed by Latin America, Europe – which benefits from favourable regulation in the form of the European Long-Term Investment Funds (ELTIF 2.0) – and the UK. Of those surveyed, 29% expect an increase in activity in each of these regions.
As the report’s findings show, CSC also observed growth conditions in the Latin American market.
“Although Latin America lags slightly behind the rest of the world in infrastructure and energy investment, investment in these sectors is a key objective for many regional governments and will fuel economic and GDP growth,” said Michael Morcom, Managing Director, Latin America, CSC. “Countries like Brazil have introduced new regulations on infrastructure debentures and allowed direct power sales agreements to be denominated in US dollars in an effort to attract more foreign investors. After years of underinvestment, we are also seeing signs of awakening in other markets, such as Colombia, Argentina and Peru.”
The APAC region, meanwhile, was mentioned by just over a quarter (26%) of respondents.
“The APAC region is seeing increasing project finance, particularly in Australia, where there is a strong commitment to carbon neutrality, as well as Japan, which, through its major banks, is exporting capital to projects in the APAC region,” said Con Kleanthous, Managing Director of APAC at CSC.
Sectoral growth
The top four sectors respondents are currently focusing on are renewable energy projects (cited by 55% of respondents), infrastructure (29%), oil and gas (25%) and real estate development (24%).
In the renewable energy sector, respondents believe that solar energy will see the greatest growth over the next two years, followed by wind energy (24%), fuel cells (14%) and green hydrogen (12%).
“Wind and solar are at the forefront because of their proven bankability performance, but as emerging technologies prove their worth in terms of financing, we can expect growth in new asset classes, such as hydrogen. This in turn will drive the increasingly complex project finance structures needed to accommodate these assets,” Gartenberg continued.
“As these structures become increasingly complex, it becomes increasingly important to ensure that all parties involved have the right levels of experience and knowledge, particularly where a project spans multiple countries and local financial and regulatory expertise is required,” continued Mr Gartenberg. “Having a provider that can offer trust and agency services, has a good knowledge of local markets, a strong track record and is able to take on a variety of roles – including collateral agent, account bank, administrative agent and intercreditor agent – can therefore play a key role in minimising risk, ensuring a smooth transaction and protecting all stakeholders’ interests.”
To receive a copy of the Project Finance Report 2024 from CSC, please contact Camilla Wyatt or Lucy Gibbs at [email protected] .
Notes to Editors
1CSC, in partnership with Pure Profile, surveyed 200 project finance professionals to gain their views on where project finance activity is currently strongest and how this is likely to evolve in the near future. Respondents spanned North America, Europe, the UK, Latin America and Asia Pacific, and worked across a range of industries including banking and finance, construction and energy.
About CSC
CSC is the trusted partner of choice for over 90% of Fortune 500 companies®of more than 90% of the 100 Best Global Brands (Interbrand®) and over 70% of the PEI 300 companies. We are the world’s leading provider of global corporate administration and compliance solutions, and are also active in the following sectors: specialist administration services for alternative asset managers across a range of fund strategies, transactions involving public and private capital markets participants, domain name system management, digital brand protection, fraud protection, and corporate tax software solutions. Founded in 1899 and headquartered in Wilmington, Delaware, USA, CSC has been a professionally managed, privately held company for 125 years. CSC has offices and capabilities in over 140 jurisdictions across Europe, the Americas, Asia Pacific and the Middle East. We are a global company with the ability to operate wherever our clients are, and we do this by employing experts in each industry we serve. Our motto is “We are the business behind business®. For more information, visit cscglobal.com.
The text of the press release resulting from a translation should in no way be considered official. The only version of the press release that is authoritative is that of the press release in its original language. The translation must always be compared with the source text, which will constitute precedent.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240903951867/fr/
Contacts
For more information
Citigate Dewe Rogerson
Camilla Wyatt ou Lucy Gibbs
[email protected]
CSC
Laura Crozier
Public Relations Manager
[email protected]
CSC News Room
