Optimization of Capital Structure for Urban Water PPP Projects Using Mezzanine Financing: Sustainable Perspective
Publication: Journal of Construction Engineering and Management
Volume 149, Issue 8
Abstract
An optimal capital structure can minimize financing cost and maximize project value. Most existing studies have focused on the equity-debt financing mode for public–private partnership (PPP) projects, neglecting the usage of mezzanine financing instruments. To bridge the gap, this study constructs a capital structure for urban water PPP projects that uses mezzanine financing called the Urban Water Project Mezzanine Financing (UWPMF) mode. Based on the requirements of sustainability, qualitative and quantitative methods are comprehensively adopted and validate the model using a PPP sewage treatment project in China. The contributions of the study are twofold. First, the introduction of a mezzanine financing tool in the context of a specific industry enriches theoretical research on PPP project financing. Second, sustainability data is included in the capital structure optimization for specific types of PPP projects, providing reference values for promoting the realization of the sustainability goals of PPP projects.
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Data Availability Statement
The data of this study are available from the corresponding author upon request.
Acknowledgments
The authors acknowledge with gratitude the National Natural Science Foundation of China (No. 72271091), the National Natural Science Foundation of China (No. 71302191), the Philosophy and Social Science Research Project of Universities in Henan Province (2020JJX26). This study would not have been possible without their financial support.
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Journal of Construction Engineering and Management
Volume 149 • Issue 8 • August 2023
Copyright
© 2023 American Society of Civil Engineers.
History
Received: Jun 21, 2022
Accepted: Feb 28, 2023
Published online: May 19, 2023
Published in print: Aug 1, 2023
Discussion open until: Oct 19, 2023
ASCE Technical Topics:
- Asset management
- Business management
- Construction costs
- Construction engineering
- Construction industry
- Construction management
- Financial management
- Financing
- Municipal water
- Practice and Profession
- Project management
- Public private partnership
- Sustainable development
- Value engineering
- Water (by type)
- Water and water resources
- Water management
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