Contractors seek cash to fund projects

The large construction groups have been in a race lately in order to ensure the required liquidity for their participation in the concession and public private partnership (PPP) project contracts that have been announced in the last two years, as well as those to be announced in the coming months.

In that context, groups are taking restructuring steps, with the sale of highly profitable renewable energy source activities in focus. At the same time, more silverware is being sold, such as stakes in existing concession companies, given that the new projects added to the groups’ quiver will generate significant revenue streams for decades to come.

According to market sources, the participation of the private sector in PPP projects is on average 25%, with the remaining amount of financing required being bank loans and the financial contribution of the state. This means that for the 5-billion-euro PPP projects already announced or expected soon, the construction groups claiming them will need equity capital of the order of €1.25 billion.

If the funds required to participate in concession projects are also calculated, the total bill is expected to rise further.