Infrastructure
By SuperdayReps · Wharton MBA · ex-Greenhill · investment banking interview coaching
18 min read · updated October 10, 2026
An infrastructure interview is mostly the standard first round. The three statements, a DCF, WACC, enterprise value against equity value and the valuation methods all still come up, and they are covered in the range of technicals and the lessons under it.
What is different about infrastructure is that the unit of analysis is often a single asset, not a company. A toll road, an airport, a portfolio of phone towers, a hospital built for the government: each sits in its own company, earns cash for a known number of years, and is financed against those cash flows alone. The questions follow from that. How do lenders decide how much to lend to one asset? How do you value something that stops earning on a fixed date? And why do infrastructure funds pay prices that look high next to a buyout?
A project finance group arranges the debt, much as leveraged finance does for a buyout. An infrastructure M&A or fund team is on the equity side. Both use the same model.
The one-sentence answer: in project finance the lender is repaid from one asset's cash flows and nothing else, so the debt is sized from those cash flows, period by period, on a coverage ratio rather than on a multiple of EBITDA. And because many assets are handed back when their concession ends, the valuation is a DCF that stops on that date, with no terminal value.
Project finance against corporate finance
The first question in most project finance interviews is how it differs from ordinary corporate lending. The cleanest way to answer is to compare them line by line.
| Corporate finance | Project finance | |
|---|---|---|
| Borrower | An operating company | A special purpose company that owns one asset |
| What repays the debt | Every business and asset the company has | That asset's cash flows only |
| Recourse to the owners | The company is fully liable | Little or none once the asset is built |
| How much is lent | A multiple of EBITDA, checked against coverage | Whatever the forecast cash flows support on a minimum coverage ratio |
| Repayment profile | Often a bullet, or a term loan with set amortisation | Shaped to the cash flows, finishing before the asset's life ends |
| Debt as a share of cost | Usually well under half for an operating company | Often 70 to 80 percent, or more for a contracted asset |
| Protections | Covenants | Covenants plus reserve accounts, a fixed order of payments and limits on distributions |
The special purpose company ring-fences the asset. If the project fails, lenders take the asset, not the sponsor's other businesses, which is why they spend so much time on its contracts: those contracts are the credit.
Leverage follows from the same logic. How much a lender will advance depends on how confidently it can forecast the cash, and much of this sector earns under long contracts, under regulation, or from demand that hardly moves in a recession. Put a regulated water network next to a fashion retailer with the same EBITDA: the network's next twenty years can be modelled within a narrow range and the retailer's next three cannot, so the network carries far more debt, and pays less for it.
Keep reading
The rest of this lesson is free with an account
There's about 14 more minutes of Infrastructure below this, plus every other lesson in Coverage Banking. Free account, no card.
Any partner school .edu
Frequently asked
- What questions do infrastructure and project finance interviews ask?
- The standard first round plus a sector layer. The sector layer is how project finance differs from lending to a company, the main asset types and how each is paid, how a concession or a PPP works, what cash flow available for debt service is, how lenders size and sculpt debt on a minimum DSCR, what the LLCR measures, how a construction loan works, how you value an asset that is handed back at the end of its concession, and how an infrastructure fund thinks about returns.
- What is the difference between project finance and corporate finance?
- Corporate finance lends to a company, which repays from all of its businesses and its whole balance sheet. Project finance lends to a special purpose company that owns one asset, such as a toll road or a power plant, and the lenders are repaid only from that asset's cash flows, with little or no recourse to the owners. So the debt is sized on the asset's forecast cash flows and coverage ratios rather than on a multiple of EBITDA, it carries reserve accounts and a strict order of payments, and it can run to 70 or 80 percent of the cost because the cash flows are contracted or regulated.
- How do you calculate the DSCR in project finance?
- Divide cash flow available for debt service, or CFADS, by debt service, which is interest plus scheduled principal in the same period. CFADS is roughly EBITDA less cash taxes, maintenance capex and any increase in working capital, adjusted for money moved into or out of a maintenance reserve. A DSCR of 1.25 times means the asset earns 25 percent more cash than it owes its lenders that period. Lenders set a minimum and size the loan so the forecast never falls below it.
- Why is there no terminal value when you value an infrastructure asset?
- Because many infrastructure assets are concessions: the government grants the right to run a road, a bridge or a hospital for a fixed number of years, after which the asset goes back to the government. The owner has no cash flows after that date, so you forecast every year to the end of the concession and stop. Assets owned outright with no end date, such as a tower portfolio or a regulated network, can carry a terminal value.
LearnAI