What really sits behind financial close?

From the outside, financial close looks like a single date in a press release. From the inside, it is a sequence in which the next document is not signed until the previous one is closed. Here is how the stack is actually built, layer by layer.

Layer 1. The deal agreements

• term sheet and mandate letter to the banks;
• EPC contract (engineering, procurement, construction, turnkey);
• PPA (power purchase agreement);
• land lease or purchase agreements;
• grid connection agreements.

Everything is signed, and there is still no money. This is commercial close, and it is often confused with financial close.

Layer 2. The finance block

• loan agreements with development finance institutions (DFIs) and export credit agencies (ECAs);
• equity subscription and shareholders' agreement;
• intercreditor agreement: who gets paid, and in what order, if things go wrong;
• security package: pledges, assignments, accounts controlled by lenders.

Signing the security package does not mean the security is perfected and registered. That item comes back later.

Layer 3. Due diligence, without which there is no drawdown

The lenders' advisers close their reviews:

• technical: energy yield, technology, geotechnics, grid impact;
• legal: land rights, licences, compliance, disputes;
• financial model: CAPEX and OPEX, repayment schedule, DSCR (debt service coverage), IRR, NPV, stress scenarios.

Until the independent engineer signs off, the drawdown waits.

Layer 4. Conditions precedent

This is where everything is decided. Before lenders are obliged to disburse:

• all agreements must not only be signed but in force;
• all equity must actually be paid in, not "committed";
• all permits and licences must be obtained;
• insurance must be in place (construction all risks, liability, cargo);
• legal opinions must confirm the deal and security are valid;
• security documents must be registered.

If a single item is open, there is no drawdown.

Only now: financial close

Lenders open the drawdown and release the first tranche, sponsors inject equity in the agreed proportion, the contractor receives the notice to proceed, and equipment moves to site.

Between "everything is signed" and "money can be drawn" lies a whole layer of conditions precedent, and it takes most of those roughly six months. Signing the loan agreement is not the finish line; it is the entry into the document queue.

First published in Russian in the Telegram channel «Просто о ГЧП» on 21 July 2026.