Deal signed for China’s first high-speed rail PPP

A group of Chinese companies has signed the first high-speed rail deal in China to be financed by private sector cash in a public-private partnership, or PPP.

The agreement was signed in Hangzhou yesterday (11 September) between a group led by Fosun High Technology and the government of Zhejiang province.

The deal, which was trailed in September last year, is for a 269km link between Hangzhou and the port of Taizhou, which is 375km south of Shanghai.

Fosun, a conglomerate known for aggressive acquisitions around the world, is to organise an investment fund of $6.9bn, which will give it a 51% holding in the project. Four state-owned enterprises, including China Railway Corporation, will take the remainder of the shares.

Bloomberg reported last year that Fosun intended to raise investment for the project using its Sunvision Capital private equity vehicle. Sunvision manages more than 30 billion yuan ($4.6bn) in funds and has a project pipeline worth almost 500 billion yuan across China, according to Fosun.

Work on the scheme is expected to begin at the end of 2017. Completion is scheduled for 2021, whereupon trains will travel at a designated speed of 350 km/h.

Li Hongchang, deputy director of the Chinese Transportation Economic Research Centre, told the People’s Daily that this development may mark the long-awaited emergence of the Chinese private sector as a force in China’s massive domestic infrastructure market.

He said: "The first private high-speed rail project helps encourage Chinese private companies to participate in the country’s infrastructure construction and promote the marketisation of Chinese railways."

The private and the state companies will together run the line for period of 30 years, including the construction period, after which it will handed over to the government of Zhejiang.

Image: The Guiyang-Guangzhou High-Speed Railway under construction in 2013 (Billy Nunn/Creative Commons)

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