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SCMP Reporter

Anhui Expressway Co, China's first road operator to be listed overseas, has its eyes on four projects as possible targets for takeover.

The company, expected to raise about $800 million in its float, began its international presentation yesterday ahead of a public offering in Hong Kong on October 31.

Anhui vice-governor Wang Xiuzhi said the company, as the province's investment vehicle, would have preferential rights to invest in its toll road projects.

The province plans to build 1,000 km of highways over the next five years at a cost of 20 billion yuan (about HK$18.7 billion).

Mr Wang said Anhui Expressway might buy into three highways and one bridge.

One highway is 150 km and runs between Hefei and Gaohe - part of the four billion yuan highway linking Hefei and Jiezidun.

Another is a 100 km section, between Hefei and Bengbu, of the six billion yuan Hefei-Xuzhou highway.

The third project is a 56 km section of the Lianyungang-Xinjiang highway, which costs about one billion yuan.

The company may also invest in the four billion yuan Wuhu Bridge.

Company chairman Wang Shui said the size of the acquisitions would depend on the funds available after the float.

The company owns only one highway - the 134 km Hening Expressway, which has daily average traffic volume of about 7,300 vehicles. This is expected to increase to 12,300 in 2000 and 53,000 in 2025.

 The company has agreed conditionally to acquire the 30 km Tianchang section of Highway 205, which runs from Lianyungang to Nanjing, for 210 million yuan.

 This will be funded by listing proceeds. The section will begin operation on January 1.

 In order to lure foreign investment in infrastructure projects, Anhui introduced 22 preferential measures in June last year.

 Mr Wang Xiuzhi said Anhui Expressway would be entitled to preferential treatment which allowed it to have a guaranteed 'reasonable' rate of return.

 The company would be compensated for any shortfall of projected traffic flows for new highway projects.

 It would also enjoy 15 per cent profit tax and property development rights in road projects.

 He said the provincial government had agreed that Anhui Expressway could raise toll fees in line with inflation.



Road operator Anhui Expressway has four projects in sights