FORMATION OF OPTIMAL CAPITAL STRUCTURE IN PRIVATE–PUBLIC PARTNERSHIP

Abstract

This paper presents the main guidelines for the formation of optimal capital structure in a public- private partnership (P3). The relevance of guidelines determines the growing number of investment projects carried out by various public – private hybrids, which, due to unique conditions of every project, usually cope with such problems as the formation of optimal capital structure and sharing of risk between shareholders. Due to this reasons, the purpose of the paper is to form a procedural model enabling to optimize capital structure of P3. The research methodology is based on the review of scientific literature as well as, the analysis and synthesis of analyzed problems and possible solutions. The created model enables to evaluate the requirement for private sector’s involvement in the delivery of public services, to select the rational basis of P3 and its form, to determine the optimal structure of public and private investment and by optimizing capital structure of private partner to evaluate financial viability of P3.