Investment Banking Team Series: Project Finance Team & Salary Prospects
This week we'll look into what the Project Finance team does, key products, and salaries.
It is split into the advisory or lending functions.The league table leader banks or project finance groups handling client advisory include JPMorgan, RBC Capital Markets, European banks like SocGen, BNP, Credit Agricole, Japanese banks like Mizuho and Mitsubishi UFJ, and state-owned banks like Bank of China.
Project financing got “separated” from normal loan products handled by the corporate banking team RMs because it is more specialised and complex. Usually the loan size is massive and serves international firms on gargantuan projects, such as infrastructure, aviation, and M&A. So sometimes #mergersandacquisitions financing is included under the PF team while other banks may set up a dedicated M&A financing team.
The unique thing about PF is that the loan or financing structure is much more complicated. For example, in aviation, banks may lend money to airlines to acquire assets like 10 Boeing planes to add to their portfolio. However, what actually happens is that they don't use the money to buy a whole set of planes, instead the bank structures a deal called “sales and lease back”. This is owing to the unique nature of the aviation sector, tax-related concerns, and exorbitant assets. So they package it as a project that helps to establish a Special Purpose Vehicle (#SPV) company where all the money is injected. This entity helps to isolate the main firm’s risk and aid with other tax or other legal issues. SPACs also are set up to serve similar specific purposes, including acquiring companies or listing on a stock exchange.
Therefore it is treated more as a project given its nature.
💼 Hiring: The project financing teams seldom hire fresh graduates. They are known to hire corporate banking RMs to move to the team. However, more recently, management trainee programs at some banks include rotations to the project financing team and if you perform well, you will be retained by the team.
PF teams may also collaborate with other teams like M&A and IBD for merger and acquisition projects. Some PF teams also need to work with the asset backed securities teams (that we discussed earlier this April) to package ABS products to be sold to clients.
💰 Compensation: Salaries tend to be 10-20% higher than the corporate banking team since project financing requires more specialised knowledge both on the technical and industry side (aviation or infrastructure specialists at VP level). You’ll be paid lower than the IBD teams but can expect saner working hours.
Hit 👍 if you want to know more about other IB teams.
---------------------------------------------
We help university students like you to get into Investment Banking, Banking, Property/ Conglomerate and Advisory/ Consulting.
Follow us on Instagram (ig: hkcareer / ibankcoaching) to know insider tips about grad job / internship hunting.
Visit https://bit.ly/hkcareersaboutus to know more about the result-based career coaching program.
