London: "The more traditional side of banking making actual loans is seriously under-represented on your blog," she wrote to me, and a few weeks later we're meeting for brunch in a restaurant on the river Thames. It's a few days before Christmas and the City feels weirdly empty, except for the brightly coloured tourists. She is a cheerful woman in her late 20s, a scientist by training. She orders French toast with strawberries, and she digs in with gusto.
"In my brain it's almost as if there are two separate parts. One that I use to think about my salary and mortgage, the other for the deals I do at work. There I may be asking, ‘Wait, was that number $2 billion (Dh7.35 billion) or $3 billion?' That's how you lose all perspective, I mean, how am I supposed to really comprehend a number like $3,000,000,000?
"As project or structured finance people, we are seen as boring by investment bankers [the traders and those in mergers and acquisitions]. But traders sit in their glass buildings all day shouting into their phones and staring at a screen, turning one number into another. I help build schools, toll roads, bridges, oil rigs and power plants in faraway places. I travel all over Europe, to Russia, Asia and Saudi Arabia, on my own, to inaugurate a gas plant, open a solar park or inspect an oil refinery. Now, who has the boring job?
"Project finance starts with somebody wanting something built. If it's a government, then this could be a school, a bridge, a power plant or an airport. So the government puts out a tender, meaning you can bid for the contract to build this thing.
Combining expertise
"Different parties will come together as often no one company has all the required expertise. A construction company knows how to build a school, but not how to operate it, nor how to finance it. So different companies put together a bid for the contract, and create a special purpose vehicle [SPV]; a separate company that will build and then run the school, airport or whatever.
"This is a big difference with corporate finance. There, established companies simply go out and ask a bank to borrow money for them, using the corporation's balance sheet as collateral.
"There's no typical working day for me, it all depends on where we are in the life cycle of the deal. I may be talking to the deal's financial advisor about the deal's structure, I may be reviewing legal documents, or technical reports about, say, gas pipelines. I may be on a site visit, on a conference call. I may be reading up on developments in the oil market, or talking to an independent consultant.
"You have consultants for the craziest things. They may count the number of cars on a toll road for you, sitting there for weeks making notes. Or they spend weeks interviewing travellers in a particular airport.
"This is what makes project finance great. Most people in finance work on a bit of a deal, then pass it on to someone else, who again does a bit, then hands it over, and so on. We do the whole thing, and when I drive through the country, I think to myself, ‘Ha, that's my toll road, that's my school, that's my police station'. This is so fulfilling.
Tightly-knit community
"Project finance is a tightly knit community. We have divided up the world into sub sectors, like energy, transport, social infrastructure... In each of these, there are probably somewhere around a hundred people active, and they all know each other. In one deal you may be pitted against somebody, then the next day it's you and that person pitted against yet someone else on another deal.
"You don't really use emotions in negotiations. That's seen as playing dirty. It makes no sense either. You can do the puppy dog eyes thing, but everyone at that negotiating table will have to get their deal approved by their own credit department back home; and these departments don't go for emotional appeals, they want to see the right numbers.
"Where things go wrong with SPVs is when people are not scrupulous. You can certainly do funny things with them, if only because SPVs do not go on a company's balance sheet so they don't count towards the total maximum risk that can be taken on.
"It's the case with many things in finance; products are very useful, but they can be abused. This is what has given project finance a bit of a bad name in the UK. But in and of itself it's great for governments to be able to outsource the building and management of a school to the parties best able to carry it out. And it's great not to have to pay for everything up front, but in steady increments over many years, as long as the government gets its numbers right and does not, say, promise so many new schools that they end up spending a big chunk of their budget for the next 25 years without realising.
"For international deals we often work with so-called export credit agencies [ECA]. Many governments have these. They finance exports from their countries — for instance they might lend you part of the money required for a project involving their industries and another agency might provide insurance for another part of the loan. This has a great impact on major deals about, say, gas fields or power stations.
"I seem to be the only one around who has no problem in telling people what I make. With a little under 10 years of experience I make about 100k a year, plus bonuses.
Happy with the rewards
"I could be making a lot more in investment banking, but I wouldn't want to. Investment banks make money with money, they speculate. That creates an atmosphere that I don't find pleasant at all. It's a much nicer environment if you don't even have to meet these people in the lift. I am very happy I work in a commercial bank instead.
"By the way, 100k plus bonus is still grossly overpaid, in the greater scheme of things, but I'm not complaining. If the bankers and City workers weren't getting good salaries and bonuses, then who'd be paying into the tax system?
— Guardian News & Media Ltd.
