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Ping An to exit $184m toll road in China

The $90bn insurance company will sell a 73.1km motorway in Hunan to Shenzhen’s largest toll road operator.

Ping An Innovation, an investment arm of China’s Ping An Insurance Company, has agreed to sell Yichang Expressway to Shenzhen Expressway for 1.27 billion yuan ($184 million; €172 million).

The transaction involves the transfer of 100 percent of the road’s project company, which has been valued at 1.76 billion yuan based on its cashflow at the end of last year, including 2016’s undistributed profit of 467 million yuan. The project company has the rights to operate Yichang Expressway until the end of 2033.  

The transaction will be paid in two installments, funded by SZ Expressway’s internal resources and borrowing, according to a filing at the Hong Kong Stock Exchange. 

SZ Expressway said that “the road has maintained a good trading record of having a steady growth in its traffic volume and toll revenue since its opening in 1999”. Its average daily toll revenue in 2016 stood at around 1 million yuan.
“The acquisition of Yichang Expressway is consistent with our expectation that SZ Expressway and SZ International will replenish their toll road assets through acquisitions after the implementation of several toll-free arrangements in the last two years,” commented Ivy Poon, an assistant vice-president at Moody’s. 

The rating agency expects SZ Expressway to remain keen on acquiring more toll roads to further strengthen its portfolio. 

SZ Expressway is a 50.9 percent-owned subsidiary of SZ International, the investment arm of Shenzhen’s municipal government. The company had invested in and operated 17 toll road projects with a total length of 537km, a majority of which are located in the Shenzhen and Guangdong regions, as of June 2016.   

For its part, Ping An Innovation, which stands for Shenzhen Ping An Innovation Capital Investment, forms part of the Ping An Trust for alternative investments. Its portfolio includes telecommunications, infrastructure, real estate, internet and healthcare industries.