CHINA SIGNS FIRST PRIVATE HIGH SPEED RAIL DEAL

The government of Zhejiang province and a  group led by Fosun High Technology has signed a Public-Private Partnership (PPP) deal  for the first high speed rail project in China to be funded by a private sector.

Fosun, a conglomerate known for aggressive acquisitions around the world, is to organise an investment fund of US$6.9bn, which will give it a 51% holding in the project while four(4) state-owned enterprises, including China Railway Corporation, will provide the remaining funds and take the remainder of the shares.

The deal is for a 269km link between Hangzhou and the port of Taizhou, which is 375km south of Shanghai. Fosun intends to raise investment for the project using its Sunvision Capital private equity vehicle. Sunvision manages more than 30 billion yuan (US$4.6bn) in funds and has a project pipeline worth almost 500 billion yuan across China.

Li Hongchang, the deputy director of the Chinese Transportation Economic Research Centre, while speaking on the deal said; “this development may mark the long-awaited emergence of the Chinese private sector as a force in China’s massive domestic infrastructure market.”

He also added;  “The first private high-speed rail project will help encourage Chinese private companies to participate in the country’s infrastructure construction and promote the marketisation of Chinese railways.”

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

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

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