Finance Awards 2016 14 Best in Large Scale Project Funding 2016 - USA Raising funds for a given project is usually at the top of the to-do-list when a company, foundation or nation has a need. Conventional financing avenues can be quite disappointing in today’s environment, as banks and other financial institutions are strapped for cash, or lending requirements are too unforgiving. However, there is an answer if one gains a historical perspective on an entirely different financing mechanism that extends back to the late 1940’s. Company: PreConstruction Catalysts, Inc Name: Michael Weiner, MBA, BS, BA Email:
[email protected] Web Address: www.preconstructioncatalysts.com Address: Washington, DC Telephone: 001- (202) 657-6960 Many people working in finance today do not have the institutional memory to avail themselves of these mechanisms which were created to provide non-recourse, non-repayable funding from the activities of a specialized system emitting from the top-levels within the banks, the IMF, and other authorities’ oversight. Decades ago— at the end of World War II – the economies of most of the affected countries around the world were devastated by the costs of fighting – and then rebuilding – infrastructures and other critical projects needed for reviving and sustaining humanity. Gathering in New Hampshire at Bretton Woods, the political basis for the Bretton Woods system was in the confluence of two key conditions: the shared experiences of two World Wars, with the sense that failure to deal with economic problems after the first war had led to the second; and the concentration of power in a small number of states. A plan was devised that encompassed various strategies to create funding for these projects which, by their nature, were not (necessarily) meant to create business ventures that would be profitable in the purest sense of the capitalist world. Reconstructed roads, bridges, hospitals, and other infrastructure needs may not be the best investment when a capitalist is seeking a return on his or her investment. To help entice private money to create funding for desperately needed projects, the financial and political engineers of this plan created a way for wealthy families and corporations holding enormous sums of cash and certain other assets to invest and achieve profits from buying and selling bank paper, profiting handsomely, and dedicating the majority of the profits into needed projects while leaving a tidy profit to the investor. In creating an environment for dollars to be generated in large sums, the evolving system today allowed for the issuance of a line of credit from a central bank to a trading bank platform, with the underlying collateral for issuance coming from a third-party investor with the requisite assets. Whilst the third-party assets are shown, they remain under the ownership of the investor with an agreement to leave them in place for the duration of a contract. This is but one step in risk mitigation to the client. There are others. With the advent of the Internet, great confusion has been created by uneducated persons, and has resulted in some negative impressions which are allayed once an investor has been properly educated and informed. Nonetheless, the system operates continuously, and rewards the investor with significant returns to fund the projects needed. This system is used to fund recovery and reconstruction efforts in various countries such as Haiti, Africa, India and elsewhere. It is also used to create housing, medical facilities, roads, railways, schools, public safety and healthcare projects. Remember that these programs operate at a very high level in the banking industry—a level where very few bank executives other than the CEO and head of trading have knowledge. Asking a branch manager about these, or even at the Senior Vice President level, will generally result in blank stares, or “we don’t do that” answers. Bank secrecy. Or just not being “in the loop” at their bank. Plus it is a private operation not privy to lower level bankers. This concept can be illustrated in the following example: Assume you are offered the chance to buy a car for $30,000 and at the same time you also find another buyer willing to buy it from you for $35,000. If the transactions are completed at the same time, then you will not be required to “spend” your own money (the $30,000) and then wait to receive the $35,000. Performing the transactions at the same time nets you an immediate profit of $5,000. However, you must still have that $30,000 and prove it is under your control. FI160040 PreConstruction Catalysts, Inc