The tool: context and objectives
The provision of public infrastructures or services through a partnership between the public sector and private capital requires the reconciliation of two opposing interests: the public interest and the guarantee of an adequate return on the investment for the private equity involved. One of the critical aspects of the economic and financial planning of such operations is therefore the quantification of the level of public funds, i.e. of the sum required from the public-sector body (the “price”) necessary for in order to guarantee an adequate return on investment for the private capital involved.
This tool, constructed in cooperation with Area s.r.l., is an exemple of an economic and financial model that, in a preliminary feasibility study, aims to provide a measure of that price. The output of the model is therefore the level of the price to be paid by the public –sector body in order to guarantee an Internal Rate of Return (IRR) of 10% on the investment.