Pricing a PPP bid
The unitary charge that gives the target equity IRR.
By Surojit Chakraverti, founder of L3VLUP and an investor running a long-short healthcare and technology equities strategy.
On this subject: pricing a ppp bid.Updated 2 October 2026
Part of project finance and infrastructure models, with the models, labs and guides around it.
What it does
The question a bidding consortium’s model exists to answer: what is the lowest unitary charge that still gives the sponsors their target equity return? Where equity cash flow is linear in the charge (no lock-up, losses relieved as they arise) it can be solved directly: split equity cash flow into a part per dollar of charge and a part with no charge, value both at the target IRR, and divide. The IRR at that charge is the target exactly. Lenders then check cover at the bid, and the bid is priced on the base performance case, not the downside.
Where it lives
The same schedule in each model that carries it, with the rows to open. Open a model in the browser, go to the sheet, and click the lines.
- Assumptions, row 21: Unitary charge: 1 = solve for the target equity IRR, 0 = use the typed charge
- Assumptions, row 38: Target equity IRR (the bid)
- Bid, rows 6–11: Equity cash flow per $1 of unitary charge, base case, Equity cash flow with no unitary charge, Present value at the target IRR, per $1 of charge, Present value at the target IRR, with no charge…
What a reviewer looks for
- A goal seek left in the model, so the bid changes when someone presses F9.
- Solving on a downside case.
- Including in the per-dollar flow items that do not scale with the charge.
Learn it, then build it
Vocabulary: Unitary Charge, Public-Private Partnership (PPP).