VUL is seeking a debt to equity ratio of 65:35. This is...

VUL is seeking a debt to equity ratio of 65:35. This is extraordinary, considering the complexity of the project and the risks involved. normally, the higher, the risk, the lower, the debt that is approved for the project. Therefore, the more riskier, the project, the more equity they require as financiers in the project.. The assurance that the debt is covered by high quality. Government loans or grant iis the reason why the debt to equity ratio can be so high.

Every company that has a project wants to have as much debt in the project as possible that can be financed at the going market rate, as it is paltry considering the rate of return of 22% on equity.It is also tax-deductible. Increases in equity required. means that the pie is divided by increased number of equity holders.

Even €100 million saved capex which does not appear to be a great saving overall compared with ithe saving in dilution of the equityholders in a large way but it produces more confidence in the project, both through debt and equity funding.