<p class="MsoNormal" style="text-justify: inter-ideograph; text-align: justify; margin: 0in 0.5in 0pt; tab-stops: center 240.0pt;"><span style="font-family: "Times New Roman","serif"; color: black; font-size: 10pt; mso-themecolor: text1; mso-no-proof: yes;">In recent years, financing through the creation of an independent project company or financing by non-recourse debt has become an important part of corporate decisions. Shah and Thakor (JET, 1987) argue that project financing can be optimal when asymmetric information exists between firms’ insiders and market participants. In contrast to that paper, we provide an asymmetric information argument for project financing without relying on corporate taxes, costly information production or an assumption that firms have the same means of return. In addition, the model generates new predictions regarding asset securitization.</span></p>