Return to search

China approves first batch of PPP listings

A group of nine infrastructure projects is ready to issue securities on the Shenzhen and Shanghai stock exchanges to tap public markets as a source of funding.

The China Securities Regulatory Commission has approved the first batch of nine infrastructure PPPs that will be allowed to issue securities on the country’s two stock exchanges.

The pilot group of projects, which cover the transportation, industrial parks, water utility and waste treatment sectors, were recommended by the National Development and Reform Commission, the CSRC said. The stock market regulator also added that the Shanghai and Shenzhen stock exchanges have reviewed and approved the securitisation schemes.

The Shanghai Stock Exchange said last Friday that it had approved securitisation plans for three PPP projects, including a wastewater treatment facility that would raise 530 million yuan from issuing securities and a tunnel PPP seeking to collect around 1.16 billion yuan. A heat distribution project also hopes to raise 706 million yuan from the public market.

Beijing unveiled a policy allowing for the asset securitisation of PPP projects last December. The NDRC, CSRC and two stock exchanges have since been working on frameworks to implement the measure, and the SSE has since set up a dedicated working group.

China has been promoting the PPP model as its main financing tool for infrastructure investments in the country and set up a Public Private Partnerships Centre in 2014 in a bid to help channel “social capital” to projects. While PPPs have since multiplied, questions have been raised as to whether PPPs are genuinely private, as state-owned enterprises, which Beijing considers as legitimate providers of social capital, are leading many of the schemes.

The Chinese market regulator believes securitisation can be a means to accelerate the delivery of PPP projects by providing alternative financing options, lowering financing costs and attracting private sector money.

The country’s PPP programme had 11,260 projects registered in the data based managed by the PPP Centre by the end of 2016. A subset of 1,351 schemes has been awarded, the PPP centre said last month.