Project finance has endured as a structure-of-choice for complex, capital-intensive infrastructure investments. This endurance has much to do with the benefits of the form for both equity and debt investors in these projects. As is typical, benefits come with burdens, and these attributes also must be considered when determining whether to choose the form for a given investment. Here we review the principal advantages and disadvantages of project finance as a method of development of infrastructure investment transactions. (Note that this Legal Update focuses on the use of debt in project finance transactions, as opposed to the incorporation into project capital arrangements of structured equity investments that are used primarily to monetize tax benefits.)

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