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Beijing-Shanghai High-Speed Railway to run IPO

Listing profitable route operator aimed at improving parent company's finances

Beijing-Shanghai High-Speed Railway generated transport revenue of over 30 billion yuan in 2018.   © Reuters

BEIJING -- The operator of the Beijing-Shanghai high-speed railway line plans to run an initial public offering potentially within the next 12 months, its state-owned parent company China Railway Corporation has announced.

It is understood the move is designed to improve the finances of CRC, which has debts of over 5 trillion yuan ($747 billion). Further investments are being planned as part of government efforts to combat the country's economic slowdown. The plan was made public on Feb. 26.

The line generated transport revenue of over 30 billion yuan in 2018, and is one of China's most profitable high-speed routes.

Xinhua reported that Beijing-Shanghai High-Speed Railway meets the requirements for an IPO, having stayed in the black for the past three years. No details for the IPO were mentioned in the reports, but the operator is likely to be listed in either Shanghai or Shenzhen, according to people familiar with the matter.

The amount that might be raised is estimated at about 30 billion yuan, and the company will potentially be listed in the latter half of 2019 or 2020.

The line stretches 1,318 km and trains travel at maximum speed of 350 kph. A total of 220 billion yuan has been invested since it started operations in June 2011. 

According to Chinese media, the line carried 180 million passengers in 2017, generating 29.5 billion yuan in transport revenue and 12.7 billion yuan in profit. 

More than half of Beijing-Shanghai High-Speed Railway's stock is owned by the investment unit of the China Railway Corporation. There are nearly ten other stakeholders, including a local insurance company.

In line with the policy agenda of President Xi Jinping, China Railway Corporation is planning its biggest ever investment in railway construction this year. The IPO of its subsidiary is being planned to reduce total deficit.

Nikkei staff writers Eri Sugiura and Akihide Anzai in Tokyo contributed to this report.

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