Securing Project Finance Without Upfront Fees

“We need €750 million for a new refinery, but we do not pay retainers.” The line arrives in our inbox more often than any other. The sponsor owns the land and holds a ministerial support letter, yet declines to fund feasibility, legal, or financial work. Without those foundations, no regulated lender will table terms. This article clarifies why legitimate upfront costs exist, explains what they cover, and sets out how sponsors can prepare before approaching capital providers.

The Myth of “Fee-Free” Project Finance

Informal networks often claim that sophisticated institutions will mobilise hundreds of millions without any initial contribution from the sponsor. The notion is appealing; the implications are damaging. Capital markets read a refusal to fund preparatory work as a signal that the sponsor lacks commitment, liquidity, or both. That perception alone can terminate a deal before it begins.

Illustrative Example: The Unfunded Refinery

A refinery proponent in East Africa requests USD 750 million. He presents a 12-page concept note, a land title, and a letter of support from the energy ministry. He insists advisers defer all fees until first drawdown. The immediate obstacles:

• No bankable feasibility study or independent market analysis.
• No environmental and social baseline, despite sensitive wetlands on site.
• No financial model stress-tested for crude supply volatility.
• No legal review of feedstock contracts or take-off agreements.

Absent those deliverables, lenders have nothing to evaluate. The project stalls—not because capital is unavailable, but because essential groundwork remains unfunded.

Why Upfront Fees Exist

Four principal work-streams demand budget prior to lender engagement:

• Technical Validation — Independent engineers verify design parameters, throughput assumptions, and construction timelines.
• Legal & Regulatory Review — Counsel examines licences, concession deeds, land tenure, and host-country compliance.
• Financial Structuring — A dynamic model sizes debt, calibrates covenants, and tests downside scenarios.
• Investor Packaging & Outreach — Creation of teasers, data rooms, managed Q&A, and direct negotiation support.

These professionals carry liability for their opinions; they invoice accordingly. A transparent retainer aligns sponsor and advisory team, enabling disciplined work and timetabled deliverables.

Indicative Budget Allocation

• Mandate / Structuring Fee: USD 75k – 400k — covers modelling, capital-stack design, and offer management.
• Technical Adviser: USD 50k – 250k — site visits, yield studies, CAPEX benchmarking.
• Legal Counsel (Sponsor & Lender): USD 70k – 300k — contract review, security package, opinions.
• Environmental & Social Consultant: USD 30k – 120k — baseline surveys and action plans.
• Insurance & Risk Consultant: USD 10k – 60k — political risk, construction-all-risk, O&M cover.

Aggregate pre-financial-close expenditure for a mid-scale infrastructure project commonly falls between 2 % and 5 % of total CAPEX.

Readiness Checklist

Sponsors approaching Financely are expected to provide, at minimum, the following:

• Concise teaser or concept note (two pages)
• Preliminary financial model with sensitivities
• Draft key contracts (PPA, offtake, throughput, concession, or supply agreement)
• Site control documents or mineral rights (as relevant)
• Corporate structure chart and ultimate beneficial owner information
• Budget provision for external advisers

Financely’s Engagement Framework

• Pre-mandate review at no cost to determine bankability.
• Formal engagement letter detailing scope, timeline, deliverables, and fee milestones.
• Retainer applied to financial modelling, documentation, and investor introduction.
• Success fee—payable only on funds disbursed—aligned with market practice.
• Transparent reporting through a secure data room and weekly status calls.

Conclusion

In project finance, credibility originates from preparedness. Upfront advisory expenditure is neither optional nor punitive; it is the price of transforming a concept into an investable asset. Sponsors who acknowledge this reality move efficiently through diligence and reach financial close. Those who resist remain in the proposal stage—often indefinitely.

Financely Group is a capital advisory firm and independent placement agent. We do not issue securities, provide guarantees, or offer investment products. All financing services are subject to documentation review, KYC, regulatory clearance, and a signed mandate agreement. We reserve the right to decline projects that do not meet minimum professional or legal standards.