China is considering ways to attract additional capital to finance investment in railways. Worldwide, private capital has been attracted to the railway sector through a range of mechanisms including:
- private sector provision of specific rail services or assets such as rolling stock;
- public private partnerships,
- leveraging commercial value of rail assets and increased land value around stations; and
- debt and equity financing of railway companies. Private sector investors seek to earn a return on their investment that is commensurate with the risk of the investment. This note discusses four mechanisms for attracting private investment:
(i) private sector provision of specific rail assets or services;
(ii) public private partnerships,
(iii) leveraging commercial value of rail assets and increased land value around stations; and
(iv) financing railway companies.
These mechanisms are discussed separately, but they overlap and can be combined as circumstances require.
Publication Date: 08.2014