Project Companies in Malaysia

A project company is a company set up to finance, build, and operate a particular project, typically an infrastructure project such as a power plant or a railway line. Project companies are usually set up as special-purpose vehicles (SPVs), which are limited liability companies designed to hold the assets and liabilities associated with the project.

Project companies are typically set up by a consortium of sponsors, which can include financial institutions, developers, and construction companies. The sponsors will typically appoint a project management company to oversee the construction and operation of the project.

Project companies are typically financed through a combination of equity and debt. The equity is provided by the sponsors, and the debt is typically raised through the issuance of project bonds.

Project companies are typically subject to a number of risks, including construction risk, performance risk, and financial risk. In order to mitigate these risks, project companies typically enter into a number of contracts with the sponsors, lenders, and contractors.

Despite the risks, project financing can be a very attractive option for companies looking to invest in large infrastructure projects. Project financing can provide companies with access to capital that would otherwise be unavailable, and can also help to spread the risk of the project across a number of parties.