By Jason Simpkins
Associate Editor
A group of insurance companies led by Ping An Insurance, China's second-largest life insurer, announced Friday that they would invest more than $2 billion in a high-speed railway running from Shanghai to Beijing, the Financial Times reported.
In addition to Ping An, the consortium includes PICC Property and Casualty Co. Ltd., Taikang Life, Tai Ping Life, China Reinsurance, China Pacific Insurance (Group) Co. Ltd., and Italy's Assicurazioni Generali. The group will hold a 14% stake in the Beijing-Shanghai Express Railway Co. Ltd., the company that has been established to build the high-speed line. The largest shareholder of the new company will be China's Ministry of Railways, with a 78.9% stake.
China's insurance firms have moved gradually toward a more-diversified investment strategy and shown an increased willingness to get involved with infrastructure projects. Last year, China Life Insurance Co. Ltd. (LFC), the country's largest insurer, began investing in domestic power grids. Now, with the blessing of the government, others are branching out, as well. Some have even gone overseas.
Just last month, Ping An became the first Chinese insurer to make a large-scale investment outside of mainland China when it paid more than $2.6 billion for a 4.2% stake in Fortis NV ( FORSY), a Belgium-based provider of banking and insurance services. Ping An is now the single-largest Fortis shareholder.
The 817-mile railway will be the world's longest high-speed railway. It will travel at a speed of about 217 mph, cutting travel time between the two key China cities in half. The project, which is scheduled for completion in 2013, is projected to cost between $25 billion and $30 billion.
News and Related Story Links:
- Financial Times:
Chinese insurers to invest $2bn in railway. - China Daily:
Construction to start on high-speed railway next month.