Greenland to Start $16 Billion Investment Fund to Build Subways

Greenland Holding Group Co. will set up a 100 billion yuan ($16.1 billion) fund with partners as the state-owned developer joins efforts to find private investors to fund infrastructure projects.

China Construction Bank Corp. will also lead the so-called public-private partnership fund to finance the nation’s urban rail projects, the developer said in a Tuesday briefing in Shanghai. Shanghai Construction Group Co. announced it would contribute 2 billion yuan to the fund, according to a statement to the Shanghai stock exchange earlier.

China is eyeing private investment to help reduce government debt as it seeks to continue an urbanization drive that’s critical to economic growth. The National Development and Reform Commission issued a call Monday for private investment in nearly 2 trillion yuan worth of projects, including garbage-treatment plants and sewers.

“The intention is to invite private enterprises to help diversify the sources of financing for such projects, alleviating the burden on local governments given their well-known debt issues,” said Lawrence Li, a Shanghai-based industrial analyst with UOB Kay Hian Investment Co. “The problem is, private players are likely to be interested in projects that are of a smaller scale with greater returns, like garbage and water treatment.”

The fund will have an initial size of 24 billion yuan, Shanghai Construction said. The three companies will hold about one-third each of the fund’s management company and serve as general partners, according to the statement.

Asset management units of Ping An Insurance (Group) Co. and People’s Insurance Company (Group) of China Ltd. are among limited partners, according to the statement.

— With assistance by Emma Dong

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