MDB Gap Financing for Projects
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.

Financely acts as an advisory and capital placement service. Financing is subject to lender and investor approvals, due diligence, and documentation. Financely does not provide loans or investment guarantees.