Discover Project Finance
“Working in this area is great because you get to interact directly with clients from the very early stages of your career. You will find yourself emailing, calling or meeting in person with clients on a daily basis and in a fast-paced environment. You are always on your toes and the work is certainly not repetitive!” – Alicia Jennison – Associate, Sydney
Did you travel by road today? When you turn on a light, did the electricity to power it come from a wind farm? Working in project finance involves helping the developers of major infrastructure projects, such as the construction and operation of roads, airports or wind farms, to secure financing for their projects. As project finance lawyers we also act for the other side—the financial institutions that fund developers. We assist with the drafting and negotiation of the financing contracts involved.
From due diligence to contracts and authorisations
Before a financial institution will agree to finance a project, they must be satisfied with the details of the project and the anticipated financial return. Lawyers perform a due diligence investigation for this purpose. This involves an investigation into the financial modelling, the assets, the company structure and any other financing arrangements the project developer has in place.
In addition, the lenders will require confirmation that all relevant project contracts are in place and are sufficient. For example, if the project is the development of a wind farm, the lenders would typically require the developer to have a purchaser locked in for the electricity that will be produced.
Finally, the lenders will need to be satisfied that the developer has all government authorisations (such as a licence to produce electricity) and rights to access the relevant land (for example, leases or easements), or a plan to obtain such authorisations, before they will back the project. It’s our job as project finance lawyers to review these agreements and identify any “red flags” that the project developer needs to rectify before any funds are advanced.
An ever-changing area of the law
This area of law interests me because it is constantly changing and to be a good lawyer in this market, you need to stay on top of recent developments.
We do a lot of work in the energy sector, which has attracted a lot of debate from a policy perspective recently. Two issues—the potential changes to the government’s approach to addressing climate change and affordable electricity—have the potential to influence our clients drastically. Therefore, we need to know how these laws can benefit or disadvantage our clients and advise them accordingly.
What’s my advice to anyone considering a career in this area? First, familiarise yourself with the major infrastructure projects within Australia and across the Asia-Pacific.
If you have the option to take any electives related to finance law or insolvency, do so. Above all, your own ambition and enthusiasm for the market and this area of law will impress.