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Capital Structure of Public–Private Partnership Projects: A Sustainability Perspective

Author

Listed:
  • Jing Du

    (Department of Construction and Real Estate, School of Civil Engineering, Southeast University, Nanjing 210096, China)

  • Hongyue Wu

    (Department of Construction and Real Estate, School of Civil Engineering, Southeast University, Nanjing 210096, China)

  • Ruoyu Jin

    (Subject of Built Environment, School of Environment and Technology, University of Brighton, Hastings BN2 4GJ, UK)

Abstract

Capital is key to achieve the standardized operation of public–private partnership (PPP) projects. The capital structure of PPP projects stresses the structure of equity and debt funds, which are important for securing life-cycle ample funds and achieving the expected outcomes of projects. By incorporating sustainability into PPP projects, the capital structure not only secures current needs of funds, it also focuses on life-cycle stable operations and achieves economic, social, and environmental benefits. This study first set the equity–debt ratio and equity investment ratio of the private sector as the dependent variables and built a selection model of the capital structure of PPP projects from a sustainability perspective using the benefit, cost, and project conditions as core factors based on multi-objective programming and a discounted cash-flow model. Then, the qualitative analysis could be achieved according to the analysis of critical factors that had not been calculated. Afterwards, a selection process which combined the multi-objective programming model with qualitative analysis was proposed to achieve a comprehensive selection of the capital structure of PPP projects from the sustainability perspective. Finally, the process was applied to a real project to verify its rationality and usability. This study not only enriches the theoretical research of PPP projects and provides a new idea on which to build the capital structure selection model, it also proposes a selection process that can provide scientific references for the selection and optimization of the capital structure of PPP projects in practice.

Suggested Citation

  • Jing Du & Hongyue Wu & Ruoyu Jin, 2019. "Capital Structure of Public–Private Partnership Projects: A Sustainability Perspective," Sustainability, MDPI, vol. 11(13), pages 1-25, June.
    • Handle: RePEc:gam:jsusta:v:11:y:2019:i:13:p:3505-:d:243091
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    References listed on IDEAS

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    2. Liu, Huimin & Song, Shuang & Hu, Yi & Yan, Xue, 2020. "Monte-Carlo optimization model for dynamic capital structure adjustment in Chinese public-private partnerships under revenue uncertainty," Transportation Research Part A: Policy and Practice, Elsevier, vol. 142(C), pages 115-128.
    3. Zhen Chen & Yaqi Zhao & Xia Zhou & Lin Zhang, 2020. "Investigating Critical Factors That Encourage Private Partners to Participate in Sports and Leisure Characteristic Town Public-Private Partnerships: Evidence from China," Sustainability, MDPI, vol. 12(8), pages 1-23, April.
    4. Huige Xing & Yuelin Li & Hongyang Li, 2020. "Renegotiation Strategy of Public-Private Partnership Projects with Asymmetric Information—An Evolutionary Game Approach," Sustainability, MDPI, vol. 12(7), pages 1-23, March.

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