A mega-project is financed on what the project itself can generate, not on the balance sheet of the sponsor behind it.

This draws on financial modeling and financial model audit work. Project finance models are among the most complex and closely scrutinized models a company builds, because lenders rely directly on the projections for their repayment analysis.

Why project finance differs from corporate borrowing

Lenders look to the project's own cash flows for repayment instead of the sponsor's broader balance sheet. Every meaningful risk (construction delay, offtake, currency exposure) therefore needs to be explicitly allocated to the party best placed to manage it, and not left ambiguous in the contracts.

What makes a project financeable

Three pillars decide whether a project can attract this financing at all. The first is predictable revenue through long-term offtake or purchase agreements. The second is credible mitigation of completion and construction risk. The third is a capital structure lenders find acceptable given the project's risk profile.

A hypothetical example

A Riyadh industrial or energy project may pursue project finance because of its capital intensity. That calls for careful allocation of construction risk, offtake risk and sector-specific regulatory risk, which differs from financing a smaller, less capital-intensive operation.

Where this connects to the lending relationship

We support structuring the deal and the financial model together, because the two need to be developed in parallel, not one after the other. We also coordinate with lenders through due diligence, which ties into the broader bank financing relationship.

Why the risk allocation conversation happens early

Waiting until financing documentation is being drafted to address risk allocation usually means the commercial contracts, such as construction agreements and offtake terms, have already been negotiated without the financing structure in mind. That then requires expensive renegotiation once a lender flags a gap.

Why a multidisciplinary team matters

Successful project finance usually needs financial, legal and technical advisers working together from the early stages, because a strong financial structure depends on commercial contracts and regulatory approvals that are consistent with it.