China’s first high-speed rail PPP hits financial close

The $6.9bn project, majority held by a consortium led by Fosun Group, is the first in the country to be funded using the framework.

China’s first high-speed railway PPP – which will see a new line built across Hangzhou, Shaoxing and Taizhou – has reached financial close this Monday. 

Fosun Group, a private conglomerate known for its aggressive overseas acquisitions in recent years, is leading a consortium of eight private firms to hold a 51 percent stake in the 44.9 billion-yuan ($6.86 billion; €5.78 billion) BOOT project. A 15 percent stake is held by state-owned China Railway Corporation, with the remaining shares in the hands of local governments. 

The concessionaire is expected to seek financing and complete construction in four years, followed by a further 30-year operation and maintenance period, before transferring the line to the government for free. 

Running at a target speed of 350km/hour, the railway project is expected to shorten the travel time between the two end-stops – Hangzhou and Taizhou, in east China – from two-and-a-half hours to within an hour. 

The fees to be charged of railway users and the government’s viability gap funding scheme will help private investors reap stable returns from the project, Fang Jianhong, executive president of Fosun’s Sunvision Capital, told Xinhua. 

Shanghai-based Sunvision is a PPP-focused private equity vehicle owned by Fosun, targeting a pipeline of PPP projects worth more than 100 billion yuan. Since its establishment in 2013, it has supported projects worth more than 20 billion yuan reaching financial close. 

Under China’s 13th five-year plan, high-speed railways will reach 30,000km by 2020, compared with 19,000km in 2015.