The Research For The Capital Structure Of Quasi-profit Infrastructure PPP Projects

Invest in quasi-profit infrastructure projects will not only be able to provide thecommunity with necessary products or services, but also to contribute to theeconomic growth. Limited government funds and low efficiency on investmentproject construction and operation cause that relying solely on governmentinvestment cannot meet the needs of the community. More and more quasi-profitinfrastructure projects are built under public-private partnership schemes. Reasonablecapital structure is critical to the successful operation of PPP projects.Through researching the corporate capital structure theory and analyzingeconomic attributes of quasi-profit project economic, this paper defines the capitalstructure concept of quasi-profit infrastructure PPP project. In this paper, combinationof factors affecting capital structure, the characteristics of quasi-operational projectsand PPP project risk management theory,14factors influencing capital structure ofquasi-profit PPP projects are identified. A planar structure factor system influencingcapital structure of quasi-profit PPP projects is constructed from the perspectives ofpolitical and economic systems, industry environment, and project characteristics.The “Prominence” and “Relation” of these factors are calculated by the methodologyof fuzzy DEMATEL. The result shows that the legal system of PPP projects,economic development in host country, the degree of monopoly in the industry, theguarantee from host government, the pricing mechanism of the project, and the futureprofitability of the project are six critical factors. The research The objectivefunctions of government departments and private investors arguably in quasi-profitPPP projects are constructed in the research. Another approach to decide the capitalstructure of quasi-profit infrastructure PPP projects under non-recourse projectfinancing and limited recourse project financing is provided.