Railway IPO to finance construction
(Shenzhen Daily/Agencies)
Updated: 2005-11-02 11:23

The State-run railways in China plan to sell shares to private investors to help pay for massive construction and restructuring, a Railway Ministry official said Tuesday.

China's economic blueprint for 2006-2010 calls for the country to spend 500 billion yuan (US$62 billion) on the railways, with several slated to launch initial public offerings (IPOs), domestic media reports say. Listings could come as early as next year, the reports say.

“If the company is mature enough for an IPO, why not let it be listed on the market?” said Li Deming, a spokesman for the Railway Ministry.

Li confirmed comments by the ministry's chief economist, Huang Min, reported in the British newspaper Financial Times, saying that foreign investors would be able to take minority stakes in national lines and majority or full ownership of local railways.

The railways are due to be divided into separate companies, and the best-run would be encouraged to pursue IPOs, Huang said.

Current plans call for the country to set up five independent corporations, though details of the breakup apparently have yet to be worked out. China has already begun experimenting with private investment in the railways, on a limited basis, both to boost financing and to help break the monopoly of the State-run lines.

A 775 million yuan line under construction between the cities of Quzhou and Changshan is about one-third owned by a private company.