PPP projects appeal to banks, insurers

Chinese banks and insurance companies are embracing public-private partnership (PPP) projects, with several giants setting up special funds lending to these ventures.

China Construction Bank Corp (CCB) is teaming up with Chinese State Construction Engineering Corp to set up a PPP Fund, Yu Jingbo, vice-president of CCB said. The initial scale would be 100 billion yuan($15.4 billion).

CCB is also partnering with insurance giant Ping An Group to fund a PPP project. It is also cooperating with Beijing-based Dayue Consulting Co in financial consulting of PPP projects.

The Chinese government is inviting non-public capitals to participate in infrastructure building and public utility projects through the much-touted PPP model. After the first batch of 30 "role model PPP projects" announced in Nov 2014 that were worth 180 billion yuan, the Ministry of Finance announced the second batch of 206 "role model projects" in Sept worth total investment of 65.9 billion yuan. A third batch is expected to be released this year.

Ren Huichuan, general manager of Ping An Group said the insurance giant is applying to set up an industry asset manager company. Among various investment targets, PPP projects are "the most important".

"Internationally, insurers and pension funds are the most important investors in PPP. PPP projects often involve huge capital and the return period could be more than 10 years, that fits well with insurers," Ren said.