This time Eloquens talks to Hedieh Kianyfard, a vastly experienced financial modeller with particular expertise in project finance modelling. She is highly skilled in investment & acquisition financing, debt financing and project evaluation strategies.
We discuss everything from her motivations to start financial modelling, tips on how to improve and her book titled “The Financial Model Detective”.
Watch the full interview here!
Before we dive into your Eloquens bets practices and any expert insights, what led you to pursue a career in financial modelling?
It’s now been almost 2 decades since I started working on project appraisal and financial modelling. I studied economics and I was interested in development economics. While doing my PhD studies in Economics, I understood the development impacts and importance of project appraisal, and I want to quote Professor Glenn Jenkins who once said: “Development is nothing but a series of good projects to be implemented. policies that stop bad projects and prevent good projects from being destroyed.”. That led me to concentrate my professional career and part of my personal life to financial modelling.
What are some of your current day-to-day activities? Is there a project you are currently working on?
I am currently working as a lead financial modeller on a number of transactions in the power sector and on the African continent. I did my Master’s thesis on the South African unemployment crisis, and I have always been interested by the African continent. It has been a privilege to be a part of some of Africa’s most significant megaprojects, including the Henri Konan Bedie Bridge in Abidjan, the Rwanda Peat Project, and the Singrobo Hydro Project in Cote d’Ivoire, among many others.
Excellence and expertise are two words that could describe your relationship with financial modelling. But what initially drove you to pursue excellence in this field?
I was listening to one of Prince (The Artist)’s most recent interviews, in which he stated that he had a lot of excellent musicians in his group and that he learns from them. He had achieved excellence in his music at that point in his career, and he was still eager to learn more. I admire this outlook on life. Professor Gosh, a Macroeconomics professor, advised me to specialize in a narrow field and become an expert. I kept this message in mind at all times and concentrated on project finance modelling, primarily in the power sector. I believe that one way to get better at something in life is to focus on a smaller area of study in which you hope to succeed.
What were your motivations behind your book titled “The Financial Model Detective”?
When I first started working as a financial modeller at the African Development Bank, my major responsibility was to assess models received from sponsors and develop an economic analysis based on the financial flows generated by the sponsor model. While reviewing models, I noticed a pattern: I first evaluate the model mechanics to see whether I should inform the bank to use the model going forward or if I should rebuild it from scratch. Then comes the model assumptions and calculation. I created a checklist for myself, which I then expanded into a book. The annex of the book contains more than 100 common questions I raised on real project finance models that I encountered throughout my career, which I found particularly useful.
With 38 best practices and over 7,400 downloads already on your Eloquens channel FinExMod, you have produced quite a range of templates. Could you mention some of the different types of content you have produced?
I have a number of complete project finance templates for Solar, wind, hydro projects in both French and English. I also have a profit plan for a Yoga studio. The remaining materials are the templates I created to explain the different concepts in project finance.
What would you say is your main value proposition from your best practices?
According to the feedback I receive from my users, they value the learning components of the many templates that I offer. My goal is to make the resources I publish practical. My day-to-day activities inspire me to do so. For example, I could be working on a project and building a tariff-setting mechanism in the model which I know would be useful for people to learn from. In that scenario, I would create a template and a YouTube video explaining the issue, and upload the spreadsheet on my Eloquens channel.
You have previously mentioned how you narrowed down your subject field to project finance modelling.
How important is it to learn project finance through the scope of financial modelling?
Allow me to rephrase the question and ask why mastering project finance through financial modelling is so important. The answer to this question concerns the importance of a financial model in a project finance transaction. A finance model is both a contractual document and a project document that will accompany different stakeholders throughout the project’s life cycle. Contracts can be better negotiated by someone who understands the financial model. You can read as many project finance modelling books as you like. Still, when it comes to the commercial side of a deal, the learning occurs when you utilize a financial model to examine the influence of different contract conditions on the project’s primary metrics. Learning financial modelling is crucial for everybody involved in project finance transactions, whether they are lawyers, technical or financial experts.
What are your motivations behind producing content for your Eloquens channel?
I want to create practical materials that people can take advantage of in their own models or simply learn for future application. My objective is to share what I have learned and experienced in the transactions I have been involved in.
Who is your ideal consumer and what solutions do you provide?
Echoing what I previously stated, my honest objective is to share my experience and possibly help someone who is dealing with a similar problem. Finance, in general, is a difficult field where things move quickly. So, if an analyst who is new to the field of project finance is asked to create a cash flow waterfall, he or she can use my template and manual to understand the concept and rebuild it in their model. Nobody told me about the cash flow waterfall when I was studying and teaching finance at university. The first time I heard the term was actually at a hydro project meeting. I thought there was a waterfall near the project site, but when they asked me to build it in the model, I realized they were referring to a different waterfall. So, with the information and templates that I share, I try to help people understand the concepts and implement them in their models. For the financial model template, my aim is to create general templates that individuals can use to perform the first round of their project appraisal and that are also flexible enough to be used further down the road and easily adapted to their project-specific needs.
Do you also have a wider target audience in mind?
Anyone interested in studying project finance modelling can be my audience. Also people who are involved in project finance transactions and require a template containing the generic components of a project finance deal to begin their appraisal.
What differentiates your financial models from your competitors?
My consumers’ ratings and feedback indicate that my financial model templates are easy to use and well-structured. Regarding the teaching materials, people appreciate that I raise practical and sometimes tricky issues in project finance modelling. When I publish a piece of content, it usually includes a PDF manual, a blog post, a video, and an Excel template.
What is the long-term vision for your channel? Do you plan to add more financial modelling templates, or do you plan to expand beyond this?
Definitely. I would like to share more model templates, not just for project finance and renewable energy, but also for small enterprises. Several people approached me over the last year to help them develop a profit plan for their business idea, and I found it very intriguing. I have since created one profit plan for my sister’s yoga studio, which I then put on my channel, and I intend to create others.
What’s one insight that you have learnt about financial modelling and in particular, project finance modelling?
Financial modelling is a key component of project appraisal. A strong financial model can help to speed up the due diligence process, save time, and ultimately save money on the project. So, throughout the life of your project, invest in a robust financial model and hire a professional financial modeller.
Hedieh is a financial modeller and investment specialist with extensive experience in project finance modelling. She is well-versed in investment and acquisition financing, debt financing, and project evaluation strategies, having worked in the analytical skills business for many years. She is also the author of “The Financial Detective,” a popular book available on Eloquens and Amazon that provides in-depth insights into her expertise in project finance. Hedieh’s templates, which include around 40 best practices and have received over 44,000 views, are available for download on her Eloquens channel, making them great resources for people interested in financial modelling, particularly project finance.