Project finance—due diligence and 'bankability'
Published by a LexisNexis Banking & Finance expert
Practice notesProject finance—due diligence and 'bankability'
Published by a LexisNexis Banking & Finance expert
Practice notes
Due diligence is an important part of any commercial finance transaction but it is absolutely critical in project finance transactions because projects are inherently risky. For more information on the typical risks involved in a project finance transaction, see Practice Note: Project risks and risk allocation.
Many projects share certain key areas of focus for the due diligence process. This Practice Note provides a summary of those areas and guidance on the type of information that the lenders will require.
Scope of due diligence in project finance transactions
Due diligence in a typical project finance transaction covers a broad Spectrum of issues including:
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legal and political matters
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environmental and social matters
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insurance Requirements, and
- •
tax and accounting issues
The scope of the due diligence reports, particularly the legal report, is often heavily negotiated by the lenders and the sponsor. For more information on the role of a sponsor, see Practice Note: Project finance—key project parties—Sponsor.
The lenders will be keen to ensure that all aspects of the project have been adequately investigated
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Jurisdiction(s):
United Kingdom
Key definition:
Due diligence definition
What does Due diligence mean?
Due diligence means that all reasonable precautions were taken and all due diligence was exercised to avoid the commission of the offence. This requires the defendant to produce evidence of the system and procedures it has devised in an effort to avoid unfair practices.
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