Corporate Financing of Mega Projects: Analyzing the Impact of Capital Structure Choices on Project Viability and Profitability (2018–2025)

Abstract

This paper examines how investment projects are affected by project financing strategies, and in particular the role of capital structure choice in the viability and profitability of mega projects, and how financing strategies lead to project performance under different economic environments. Megaprojects are capital intensive mega infrastructural and industrial projects having high exposure to financial and operational risks and therefore, deciding the financing source –equity, debt or –hyper seems critical for their success. Through thematic literature review and comparative case study analysis of sample projects from developed (Crossrail UK, Tesla Gigafactory USA) and developing (Lekki Deep Sea Port Nigeria, Delhi Metro India) nations, the study investigates how the configurations of capital structure influence ROI, cost control, time-to-completion, and investor confidence. Results indicate that projects with relatively well-aligned and context-specific capital structures are associated with better financial performance and smoother operations. Hybrid and actively managed capital model with a good risk sharing mechanism seems to be the most effective tool to reduce cost overruns and buying banks in. The paper gives important implications for policy makers, such as the importance of improving the credit system and increasing access to long-tem capital, and targeted incentives in the fiscal regime. It is also vital for project sponsors to take on flexible funding strategies, and mature as projects mature. Future research is advised in new fields such as ESG-related financing, the contribution of green bonds to infrastructure financing, or the potential of digital technologies in infrastructure finance. These are promising areas to transform mega projects capitalization and governance in the forthcoming years.