Public - Private partnership financing in South Africa

Prüssing, Tim

Public - Private partnership financing in South Africa

Master Thesis

2015

Publisher

University of Cape Town

Department

Department of Finance and Tax

Faculty

Faculty of Commerce

Abstract

This study argues that the financing options available to PPPs in the South African financial market are limited and only few traditional financing solutions, such as commercial bank debt, are available to project developers. While traditional financing solutions may provide an attractive and easy to obtain financing solution, they are not necessarily optimal, cheap or able to provide the best value for money (National Audit Office, 2001). This suggests that the South African financial market, which is so critical to the success of PPP projects, may in fact be hindering the development and efficiency of the market. The main research questions addressed in this study are: * what is a PPP and what does its typical structure look like; * what is the state of the South African PPP market including framework and number of projects procured; * what financing options and models are available to PPPs worldwide; and * what financing solutions have been employed on South African projects? In answering these questions, we particularly focus on the financing options available to PPPs. As part of this overview we discuss private sector and public sector solutions. Private sector solutions discussed include equity, debt and mezzanine finance. We give particularly focus to debt financing which tends to make up the majority of financing in a typical PPP. Public sector solutions include government contributions, guarantees as well as hybrid structures.

Keywords

Financial Management

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