Project Finance Advisory
MDB Gap Financing for Projects
Many infrastructure and energy projects fail for a simple reason: the capital stack is almost complete but not fully funded.
A sponsor secures equity, obtains senior debt indications, and even receives support from a development institution. Yet the project still cannot reach financial close because a portion of the required capital remains unfunded. This is known as the funding gap.
Gap financing is the capital tranche that allows a project to move from a viable concept to an executable transaction.
What MDB Gap Financing Means
Multilateral development banks (MDBs) support projects that meet economic development objectives. They often provide senior debt, guarantees, or political risk mitigation. However, MDB participation rarely covers 100% of project costs.
The remaining capital must be raised from private lenders or investors. Without that tranche, the project cannot reach financial close regardless of its quality.
The role of gap financing is not to replace senior lenders. It is to complete the capital structure so senior lenders can disburse.
Typical Project Capital Stack
Sponsor Equity
Initial capital committed by project developers or shareholders.
Senior Debt
Loans provided by banks or development finance institutions.
MDB Participation
Development bank lending, guarantees, or risk mitigation support.
Gap Capital
Mezzanine debt, preferred equity, or structured credit completing the funding requirement.
Why Projects Develop Funding Gaps
- Construction risk not acceptable to senior lenders
- Country risk limitations
- Revenue ramp-up periods
- Sponsor equity constraints
- Debt service coverage requirements
Senior lenders structure facilities conservatively. As a result, the financing package often leaves 10%–40% of required capital unfunded.
What Gap Investors Evaluate
Contract Structure
Offtake agreements, concessions, and revenue security.
Project Economics
Cash flow stability and debt service coverage.
Construction Risk
EPC contractor strength and completion guarantees.
Sponsor Capability
Track record and operational capacity.
Projects rarely fail because capital does not exist. They fail because the project is not packaged in a format investors can underwrite.
How Financely Assists Project Sponsors
Financely works with project sponsors to structure and raise the remaining capital required to close the financing package. This includes preparing lender-ready materials, structuring the capital tranche, and approaching appropriate funding sources.
- Capital stack structuring
- Gap capital sourcing
- Lender and investor outreach
- Financial close coordination
Our role is to make the transaction executable for capital providers, not to rewrite the project concept.
Engagement Terms
Advisory engagements for MDB gap financing assignments typically begin with a retainer starting at $200,000.
Upon successful capital raising, a success fee of 2.5% of proceeds raised
applies.
These rates reflect standard market practice for project finance advisory mandates and may be negotiated depending on project scope and readiness.
Request A Gap Financing Quote
Project sponsors seeking gap financing can submit their project information and documentation using the intake form below. We will review the project and respond regarding feasibility and engagement scope.