Definition: "Build-Own-Operate" (BOO) describes a business model commonly used in infrastructure development and project financing.

It refers to a contractual arrangement where a party, usually a private company or consortium, assumes the responsibility for designing, constructing, owning, and operating a facility or infrastructure asset. This model is prevalent in various sectors, including energy, transportation, telecommunications, and public-private partnerships (PPP). "Build-Own-Operate" projects typically involve a lengthy contractual framework known as a concession agreement, which outlines the rights, obligations, and financial arrangements between the project company and the public entity or grantor. The project company assumes the risk involved in developing and operating the asset, usually financing a significant portion of the project costs through debt and equity. From a financial perspective, the project company may secure funding from various sources, including commercial banks, development banks, institutional investors, and capital markets. The funds acquired are primarily used to finance construction and acquisition costs. The company then generates revenue by operating the asset and charging users (e.g., toll fees for roads, electricity tariffs for power plants) or through a concession fee, as agreed upon in the concession agreement. The "Build-Own-Operate" model offers advantages to both the project company and the grantor. For the project company, it allows them to participate in infrastructure development, providing a steady revenue stream over an extended period. Additionally, the concession agreement guarantees the project company exclusive rights to operate the asset during the concession period. On the other hand, the grantor benefits from "Build-Own-Operate" projects by transferring the risks associated with infrastructure development, operation, and maintenance to the project company. In the case of PPPs, this model allows the government to leverage private sector expertise and resources, avoiding the burden of financing infrastructure projects solely using public funds. Overall, the "Build-Own-Operate" model has proven to be an effective mechanism for infrastructure development and finance. Its flexibility and potential for attracting private investment have made it a popular choice for various capital market participants seeking opportunities in infrastructure projects. With well-structured contractual agreements and sound financial management, "Build-Own-Operate" projects can lead to successful investments, spurring economic growth while fulfilling societal needs. As a leading platform for equity research and finance news, Eulerpool.com provides comprehensive insights into the "Build-Own-Operate" model and its applications in capital markets. With our glossary, investors and market participants can stay informed about this and other terms related to stocks, loans, bonds, money markets, and cryptocurrencies. Stay updated with the latest trends and developments in the industry, supporting your investment decisions with expert knowledge. Visit Eulerpool.com today!