Vietnam Gas-Fired Power Plant — Investment Memorandum
Conclusion
Conditional approval from a mock investment committee
- Course
- FNCE6051, SMU MAF
- Asset
- Gas-fired power plant
- Deliverable
- IC investment memo
- Key metric
- DSCR sensitivity
- Verdict
- Conditional approval
An investment memorandum for a gas-fired power plant in Vietnam, prepared for the Project & Infrastructure Financing course (FNCE6051) in the SMU Master of Applied Finance and presented to a mock investment committee, which returned a conditional-approval verdict. The work covered structuring the project's capital stack and running sensitivity analysis on debt-service coverage and equity returns — the two questions that determine whether a project-financed power asset is bankable.
Mandate and verdict
The assignment was to author a full investment memorandum for a gas-fired power plant and defend it before a simulated investment committee, mirroring how an infrastructure fund or project-finance lender evaluates a greenfield power asset. The committee returned a conditional approval — a go-ahead contingent on specified conditions rather than an unqualified endorsement, reflecting a realistic project-finance stance: the asset is fundable, but approval is gated on the structure and coverage metrics holding up under stress.
Capital-stack structuring
A core component of the memo was structuring the project's capital stack — the layering of senior debt and equity that funds construction and is repaid from the plant's operating cash flows. In project finance this is the central design problem: how much leverage the contracted revenues can support, how debt is sized and sequenced, and how residual risk and return fall to equity. The memo lays out that structure as the foundation for both the coverage analysis and the equity-return case.
DSCR and equity-return sensitivities
The memo ran sensitivity analysis on the two metrics that govern an infrastructure deal: the debt-service coverage ratio, which measures whether project cash flows comfortably cover scheduled debt payments, and equity returns, which determine whether sponsors are adequately compensated. Testing these across scenarios reveals how resilient the financing is to changes in operating assumptions — consistent with a coverage-and-returns profile that works in the base case but left the committee requiring specific conditions before final commitment.