1. Introduction

Industrial projects typically are unique undertakings; seldom apply the same key ingredients for more than one project. This is because these ingredients are either limited, like natural resources as feedstock or the market demand for the product, or the commitment required from the stakeholders stands for such a large burden that most players are not able or not willing to enter into more than a single project at once.

Common for industrial projects are large investments and the application of complex technology for the production facilities. The realization and completion from the first project idea until first production is usually a major undertaking with a timeframe of some years.

In financing industrial projects the balancing of chance and risk plays an important role. The quantification of the possible value and the evaluation of the risks associated with the project is a matter of successfully forecasting scenarios for the development of factors influencing the project economics. The results of this forecast finally have to match the investor’s expectations and risk preference.

The role of institutional investors, especially Pension Funds, in the capital markets is immense, as the assets under their management are often reaching the GDP of the country. In developing countries the function of Pension Funds is more than just to provide adequate pensions. The large amounts of capital need to be channelled to develop the industry, economy, people education and the countries infrastructure and thus to lay the seeds for further growth and prosperity.

This diploma thesis studies possible roles for institutional investors, especially pension funds, in the financing of industrial projects. It is evaluated how their business model, the situation of market and competition and the regulations by the authorities support a possible role in the financing of industrial projects.

A case study for a fertilizer project in Peru transfers the results of the thesis to a specific project.