Why is infrastructure fundraising so difficult to indulge in or arrange for? The biggest reason is the sheer size and scale involved. Apart from the amount of money involved, there is also the element of time. Projects involving infrastructure, utilities, or natural resources usually have a long gestation period, and the investors need to wait for an extended period of time before their investments would begin providing good returns.
Companies which invest into infrastructure projects usually take two routes for their entry. They either go in for debt financing of the project or they provide infrastructure equity funds. In the former there is no ownership involved and the money is just provided as a loan. In equity, the investor also gets a share of the ownership of the company. The amount invested is not repaid, but according to the extent of ownership, a share of the profits would accrue. But in case the venture goes into losses, those have to be borne by the investor as well.
While carrying out equity funding, the two most common methods are by mergers or acquisitions. In oil and gas mergers and acquisitions the investing company either acquires a company completely or gets it merged. This enables the investing company to add on the relative strengths of the other company and overcome some weaknesses or gaps in its own arsenal. The net result is that the combined is in a much better shape financially as well in terms of skills and abilities.
The oil and gas M&A activity is not just a matter of paying a certain sum of money. The company taking over another company needs to first assess the financials of that company. On top of that, the relative strengths and weaknesses also need to be assessed, to ensure that the new entity has qualities that are better than either of the two separate entities. In case the two companies involved belong to two different countries, then the tax and regulatory implications of the merger or acquisition need to be assessed.
For all such activities, companies like Kapok Capital offer seamless consulting and fundraising support. They have a great team of experienced professionals. This team would be able to arrange for both debt and equity funding. In case funding is not needed, they could also be utilized for carrying out all the necessary due diligence required for a merger and acquisition initiative.
