Project finance

And that we're starting to see it in markets where people are connotating AI risk with an entire swath of companies and being less idiosyncratic.

People are thinking about being full on generic AI risk, which would run from the chips to Oracle to SpaceX to Project Finance.

And it's all being lumped in the same bucket, which is part of the reason you're seeing all those names trade relatively cheaply in the credit default swap market.

So I think you hit the nail right in the head.

The funding requirement for climate globally is 5 trillion per year.

So how do we turn 3 into 30? Project Finance is based on the premise that one can identify and define risks.

That's groovy if you can define the risk.

The reality was that when you're trying to build a toll road in Nigeria, most of the risks that you're exposed to, firstly, it's not a comprehensive list.

Very interesting project because it was cross-border.

It had two countries involved in it.

But that was almost the kickstart of large-scale project finance in South Africa.

Coincidentally, Prior to that, in 1996, the very first African infrastructure fund was established by a standard bank called the South African Infrastructure Fund.

you know, in the, in the late 2010s was had the second most installed solar in the U S behind all in California.

And there's, uh, you know, that's somewhat surprising, but in doing interviews with, uh, people who were working in this area called project finance, um, what they sort of explained to me was the way that sort of project finance people, people who work in this area, um, were able to pull together a bunch of different subsidies, things like, uh, investment tax credits, um, things like renewable energy certificates, uh, things like, uh, loan guarantees that were meant for specifically for rural areas.

Um, they pulled all these together and what they figured out, uh, was how to basically make a solar farm, uh, at least on a spreadsheet initially, how do you make a solar farm where everything pencils out, right? Where you can look at it and say, okay, in five, seven, 10 years, we're going to be making positive revenue coming out of this.

And it's sort of a remarkable story of

quality projects.

So there was some real concern as I was sort of wrapping up the interviews that this was kind of turned into a little bit of a bubble, right? That they had poured so much money into it.

And lo and behold, a couple of years later with the election of Donald Trump, the kind of cornerstone of the project finance piece that was allowing all these projects to get built, the investment tax credit, the federal investment tax credit was repealed.

And so that, as I mentioned, that kind of house of cards that Project Finance was built on started to crumble.

So, for example, if you're interested in working in private equity or in equity research or corporate development or any number of areas, Going into a big four and their financial modeling teams might give you that the opportunity to work and touch on those areas as well and then have a really solid foundation for that next step.

If, for example, you're interested in infrastructure, I would say to a lot of what I do is project finance and infrastructure modeling.

I think then really the boutique consultancies are amazing at that.

you know, really going to a company that specializes in project finance modeling and are very focused on best practice financial modeling, then I think that is an amazing step.

And that would not necessarily predefine you as a career financial modeler.

I mean, I'm not saying that it's a bad thing.

I mean, that it is just that that is one option of many others.

So it's If you go to a boutique project finance consultancy, you have all the options to move into infrastructure funds or that area as well.