Transportation Infrastructure Project Financing; Highways Capital Structure Design Techniques

Hanieh Soleymani,Mehdi Montazer,Mehdi Ravanshadnia,S Mahdi S Kolbadi

doi:10.1155/2021/4988577

Hanieh Soleymani, Mehdi Montazer + Show 2 more

Open Access

https://doi.org/10.1155/2021/4988577

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Abstract

Whether a private bidder can win a concession depends largely on advanced financial engineering techniques, numerous methods were developed. Meeting large infrastructure needs including its proper maintenance and operation is and will remain a major challenge for the all-around the in the coming years requiring targeted innovative financing mechanisms. Even though it is recognized that there are three types of financial instruments, equity, mezzanine finance and debt in funding an infrastructure project, the status quo is that previous capital optimization methods did not consider mezzanine finance or simply categorized it into debt-like or equity-like instruments. The global infrastructure sector is witnessing a steady growth of private equity investment in mezzanine instruments. The frequent usage of the contingent claim embedded in mezzanine financing makes the traditional model for capital structure optimization invalid. This study presents a more advanced method to optimize capital structure in infrastructure financing. This easily implemented method is based on a two-stage procedure: I) identification of optimal stopping time for convertible securities, and II) capital structure optimization by a conventional model. The quantitative optimization model can be easily generalized. The global infrastructure sector is witnessing the continued growth of a private equity fund of mezzanine tools. Repeated use of potential claims embedded in mezzanine financing has invalidated the traditional model for optimizing capital structure.

Highlights

Governments have traditionally used their budget resources for many years to do activities and projects
Public owners of infrastructure projects that originally bore the brunt of infrastructure financing with a variety of infrastructure financing structures have to face a daunting challenge of balancing the need for high costs and limited budgets [3]
States around the world are looking for new alternatives economically efficient [4]. is project offers a few quantities strategies that can facilitate the presence of private investors in infrastructure financing

Summary

Introduction

Governments have traditionally used their budget resources for many years to do activities and projects. Research shows the agents influencing the capital structure of companies and provide a definitive answer to the following question: Why does a number of companies choose the option of issuing shares, some of them use of internal resources, and others the method of borrowing for their financing activities in different circumstances? E step in a pyramid scheme is investing in things like long-term certificates of deposit, government securities, and buying bonds from companies that are financially and administratively sound; these investments have a reasonable return because they pay a fixed interest rate on the money invested. Most people’s money goes to equity stocks and mutual funds, which are considered safe investments in terms of rankings, and a small amount of people’s money goes to very high-risk investments

Materials and methods

Analysis and discussion