Beijing-Shanghai High-Speed Railway Co Ltd, the operator of the high-speed railway between Beijing and Shanghai, was granted approval for an IPO by the China Securities Regulatory Commission (CSRC) on Friday, a decision that will accelerate the marketization of the railway sector, expert said.
Under its proposed IPO, up to 7.56 billion shares will be offered to raise money for the acquisition of a 65-percent stake in the Anhui branch of the Beijing-Fuzhou High-speed Railway at a price of 50 billion yuan ($7.14 billion), according to information disclosed by the CSRC.
"As a profit-making company, the listing of the Beijing-Shanghai High-Speed Railway Co will not only raise more money for the company's expansion. As a company with healthy growth and positive financial reports, it's a boost to the capital market and provides a marketized operation model for large state-owned enterprises," Feng Liguo, an expert at the China Enterprise Confederation, told the Global Times on Sunday.
The Beijing-Shanghai high-speed railway, which opened in June 2011, is one of the most popular and profitable railway lines in China. The line covers 1,318 kilometers and trains run at 350 kilometers per hour.
A total of 1.1 billion passengers have been transported by the railway over the past eight years, and the operator has been making profits every year since 2014.
In 2018, the net revenue of the railway totaled 10.2 billion yuan, according to a report by the Xinhua News Agency.
"The listing is a major breakthrough in the marketization of the railway sector. After the IPO of the Beijing-Shanghai High-Speed Railway Co Ltd, more railway companies are expected to be publicly listed," Feng said.
The railway sector has been exploring ways of marketization since 2013, when the Ministry of Railways was abolished.
China State Railway Group, which controls the Beijing-Shanghai High Speed Railway, marketized several of its business operations in 2018. Wi-Fi service on high-speed trains and delivery services are now under joint operations with privately owned companies in China.
