Toll-road operator joins eight other China infrastructure plays tapping the market for expansion funds Shanxi Expressway, a toll-road operator in northern China, plans to raise about US$400 million from an initial public offering in Hong Kong in the second quarter of next year, market sources said. The company will join eight mainland highway stocks in the Hong Kong market. The eight include Shenzhen Expressway, Jiangsu Expressway, Road King Infrastructure and Hopewell Highway Infrastructure, which on the average trade at almost 15 times forecast earnings next year. Shares of those eight companies on the average have about doubled since the beginning of the year as the mainland's increasing traffic drive their earnings. Shanxi Expressway could not be reached for comment. Sources said HSBC will arrange the share sale. Shanxi Expressway is looking to benefit from the fast expansion of highways in its home base. A report from Xinhua said the Shanxi government plans to double the expressway network in the province to more than 3,000km by 2010. A new highway between the provincial capital Taiyuan and Changzi, a city in the province with a population of about 500,000, opened last year. That brings the length of the province's highway network to 1,686km. Shanxi Expressway could also be a candidate to receive investment from Ping An Insurance, as the insurer said in July it will buy stakes in three expressways in the province. The State Council granted Ping An, China's second-largest insurer, a 10 billion yuan quota to invest in infrastructure projects in a move to help it gain better returns. The firm did not specify the amount or size of the stakes it will take. Other mainland highway operators have been tapping the capital market to fund their expansion. Tianjin Highway, a state-owned enterprise that partially holds Tianjin Expressway, plans to raise about US$200 million by selling bonds to fund expansion, sources said. The bonds will be placed privately to international infrastructure funds and will yield about 12 per cent. The deal is expected to close by the end of next month. Hong Kong and mainland-listed toll-road operator Shenzhen Expressway in September said it plans to raise 1.5 billion yuan from selling bonds convertible into A shares. Jiangsu Expressway, its larger peer, in July said it plans to raise as much as four billion yuan by selling bonds backed by toll income from its roads. China, after adding 24,000km between 2001 and last year, had 41,000km of expressways at the end of last year. That makes it the second-largest system in the world behind the 90,000km of expressways in the United States. China expects to have 65,000km of expressways by 2010 and 85,000km by 2020. Projects under discussion include superhighways connecting the Yangtze River Delta, Pearl River Delta and Bohai Rim, the three key economic development zones on China's eastern seaboard. Another potential project includes a bridge connecting the mainland to Taiwan.
