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Determine optimal capital structure for metro PPP projects to reduce financial risks: Theory and empirical analysis

  • Harbin Institute of Technology Shenzhen

Research output: Chapter in Book/Report/Conference proceedingConference contributionpeer-review

Abstract

Public Private Partnerships (PPP) projects not only could attract abundant private capital to solve the scarcity of public funds, but also take advantage of techniques and experiences of private sector to accelerate metro development. PPP project capital structure had taken into account the interests of the Government, private investors and creditors, optimizing of the PPP project risks to an optimal capital structure to achieve a win-win situation. The object function was the weighted utility function of the internal rate of return and the debt service coverage ratio which included financial risk variables and financial assessment indicators to minimize the financial risk of the key participants and urban metro PPP projects. Then the Monte-Carlo simulation would draw an optimal capital structure, with the conclusion of the decision-making basis for investor, loaner as well as the governor.

Original languageEnglish
Title of host publication2013 International Conference on Management Science and Engineering, ICMSE 2013 - 20th Annual Conference Proceedings
Pages2105-2111
Number of pages7
DOIs
StatePublished - 2013
Externally publishedYes
Event2013 20th International Conference on Management Science and Engineering, ICMSE 2013 - Harbin, China
Duration: 17 Jul 201319 Jul 2013

Publication series

NameInternational Conference on Management Science and Engineering - Annual Conference Proceedings
ISSN (Print)2155-1847

Conference

Conference2013 20th International Conference on Management Science and Engineering, ICMSE 2013
Country/TerritoryChina
CityHarbin
Period17/07/1319/07/13

Keywords

  • Metro PPP projects
  • Monte-Carlo simulation
  • financial risks
  • optimal capital structure

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