Avaliação de projetos de investimento em Regime de Project Finance

: a concessão Beira Litoral e Alta

Abstract

Following an internship developed in Ascendi for the completion of a master's degree, this report addresses two themes of Finance: Project Finance (PF) and real assets valuation. PF is the process of financing a specific economic unit that the sponsors create and is often used for capital-intensive facilities and utilities.. Its main characteristics are: (i) the debtor is a project company (special purpose vehicle) that is financially and legally independent from the sponsors; (ii) lenders are satisfied to look initially to the cash flows and earnings of that economic unit as the source of funds; and (iii) high levels of leverage vis-à-vis corporate financing.. Given the specific characteristics of such transactions, the discussion about which Discounted Cash Flows’ (DCF) model is best suited to value PF or PPPs have been increasing. In this report, we use the following models in order to value ‘Beira Litoral e Alta’ concession: Free Cash Flow (FCF) model, Equity Cash Flow (DCF) model, Capital Cash Flow (CCF) model, and Compressed Adjusted Present Value (CAPV) model. The objective of this work is to determine if the choice of different DCF valuation models, even being mathematically equivalent, has an impact in the obtained results. Additionally, it is intended to verify if the FCF model leads to unreliable results, underestimating the impact of the interest tax shields - linked to higher levels of leverage - on the concession value, . After applying the DCF models selected, we conclude that the choice of the valuation model does in fact influence the results obtained. Furthermore, we find that the FCF model underestimated the impact of interest tax shields on the concession value, and that the CCF and CAPV models are more reliable when valuing PF or PPPs projects, which is in line with the existing literature.

Date of Award	2015
Original language	Portuguese
Awarding Institution	Universidade Católica Portuguesa
Supervisor	João Pinto (Supervisor)