Abstract
G-S interactive finance framework is the ideal one to enhance the success rate and efficiency of utilities tunnel projects. Government/non-profit organizations/individuals (G part) and profitable social organizations/individuals (S part) are the counterparties to the G-S interactive finance framework. Utilities tunnel projects flexibly select one funding model or several funding modes to maximize the management revenue. Choice of suitable funding mode (like debt funding, equity funding, internet finance) is important to acquire enough construction capital for these types of projects. According to the number of investors, size of the financing, financing tenure, and finance procedure convenience, every funding mode has its own special character, usage, scope, and procedure. This chapter explores crowdfunding pledging analysis for these types of projects. Small projects of utilities tunnels can use crowdfunding mode, and big projects of utilities tunnels can use crowdfunding mode gradually.
TopIntroduction
Utilities tunnel projects have been rapidly constructed and developed in China. These projects have made great contribution to the working and living of the people in cities. Rational finance design and funding mode will improve the construction and operation for utilities tunnel projects. This chapter uses G-S interactive finance framework to analyze the fulfillment of utilities tunnel projects and their funding modes in China and gives an exploratory crowdfunding analysis for the fulfillment of utilities tunnel project.
This chapter first analyzes non-profitable government and other organizations or individuals (G part) and profitable social organizations or individuals (S part) to construct and operate utilities tunnel project together. A framework of G-S interactive finance is used to give exact analysis for the construction and operation of utilities tunnel project in China. The cooperation between G part and S part increases the successful rate and efficiency. G part and S part can flexibly adopt many different styles such as franchise BOT (build-operate-transfer). Government organizations will give this project to social companies to design, construct and operate in certain franchise period. When franchise period is over, social companies will transfer utilities tunnel project to government with no returns. All life cycle management can be used to increase the efficiency of utilities tunnel project. In all life cycle management mode, the design, construction, operation and supervision are managed together to fully make use of every stage’s character and to balance every stage’s development to realize high efficiency running and economic revenue.
Second, this chapter introduces several funding modes for utilities tunnel project, including bank loan, bond, equity, securities fund and Internet finance funding modes in China, which are helpful to acquire enough construction capital timely and efficiently. Every funding mode has its special character and usage scope and procedure, and the advantage of every funding mode should be fulfilled for utilities tunnel project. According to project scale, geography location, construction cost and operation management, these funding modes have different management requirements and procedures. Utilities tunnel project should flexibly select one funding mode or several funding modes to maximize the management revenue. All funding modes should be satisfied with the lowest weighted capital cost. Finance risks probably produced by all kinds of funding modes should be fully considered, and the risk that is unable to get the capital timely and the risk that is unable to repay finance capital should be avoided.
Third, this chapter gives an exploratory crowdfunding pledging analysis for fulfillment of utilities tunnel. Crowdfunding projects are fulfilled on Internet platform, and founders pose project introduction on this platform and backers supply pledged capital also on this platform. The management of crowdfunding platform usually includes “All-or-Nothing” and “Keep-it-All” two types. One utilities tunnel project should choose suitable type of crowdfunding platform to fulfill. Utilities tunnel project can use crowdfunding to increase funding modes besides traditional debt and equity funding modes and can use flexible crowdfunding strategy and procedure to fulfill. Crowdfunding mode can be flexibly used to pledge construction capital in middle and small utilities tunnel projects now.
This chapter contributes to the literature mainly in the following points. First, it gives an exploratory pledging analysis for crowdfunding mode in utilities tunnel project. To the best of the author’s knowledge, this chapter is the first to give analysis on crowdfunding mode used in utilities tunnel project. Second, it uses non-profitable organizations or individuals, profitable social companies and profitable other social organizations or individuals to analyze the finance bodies for the construction and operation of utilities tunnel project. Third, it uses G-S interactive finance framework to analyze the process and character of bank loan, bond, equity and other funding modes for utilities tunnel project.
Key Terms in this Chapter
Crowdfunding: A new type Internet funding tool, whose character is the capital can be pledged from many backers to supply the project of founder with the advantage of Internet platform.
BOT Style: A typical operation style for utilities tunnel project. It mainly includes the process of build-operate-transfer.
Utilities Tunnel: By constructing corridor in some depth underground, water supply and drainage, electric power, telecommunication, gas, rubbish and other pipelines are laid inside utilities tunnel, which can be used to construct and maintain together.
Platform: An Internet platform tool used for crowdfunding. The pledged goal, pledged date, delivery date, reward and other introduction of project using videos, photos and words will be posted on the platform.
“All-or-Nothing” Mode: The founder can get pledged capital from backers if pledged capital surpasses pledged goal, and backers needn’t supply pledged capital if pledged capital doesn’t arrive at pledged goal.
G-S Interactive Finance Framework: A framework used to analyze the finance design for construction and operation of utilities tunnel project.
“Keep-it-All” Mode: The founder can get pledged capital supplied by backers whether or not pledged capital arrives at pledged goal.