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- Key steps in financing a project and relevant issues
Conducting due diligence and understanding “bankability”
Due diligence is an important part of any commercial finance transaction, but it is absolutely critical in project finance transactions because projects are inherently risky (see Identifying and analysing project risks and risk allocation — part 1).
Many projects share certain key areas of focus for the due diligence process, including feasibility, legal and political matters, environmental and social matters, insurance requirements and tax and accounting issues. This guidance note provides a summary of those areas and guidance on the type of information that the lenders will require. Importantly, this guidance note explains the concept of “bankability” in the context of a project finance transaction. “Bankability” determines whether or not lenders are prepared to provide financing for a particular project.
See Conducting due diligence and understanding “bankability”.
