Recently, China Power Construction announced another major news. In order to further optimize the capital structure, China Power Construction (Beijing) Fund Management Co., Ltd., a subsidiary of China Power Construction (Beijing) Fund Management Co., Ltd., and China Water Resources and Hydropower Fifth Engineering Bureau Co., Ltd. jointly initiated the establishment of Chengdu China Power Construction Chunlong Investment Partnership.

Led by the Power Construction Fund, the subscribed capital is 500,000 yuan; the Fifth Hydropower Bureau subscribed for a capital of 1099.5 million yuan, a total of 1.1 billion yuan, to jointly establish Chengdu China Power Construction Jingyu Equity Investment Fund Partnership (Limited Partnership) (hereinafter referred to as: fund). The fund's main investment areas: the transformation and upgrading of the independent industrial and mining area of Tongliang District, Chongqing City, the PPP project of industrial-city integration, and other infrastructure projects led by the Fifth Hydropower Bureau.

Introduction to Chongqing Tongliang Project

The PPP project is located in Tongliang District, Chongqing. The scope of project cooperation includes Tongliang High-tech Zone (including Damiao Group and Jiuxian Group), Tonghe Industrial Belt and Tongliang Central City (Bachuan Street, Dongcheng Street and Nancheng Street). The cooperation content includes four parts: emerging industry development services, mineral resources integration and comprehensive utilization, public livelihood service facility guarantee, industrial development infrastructure and operation, which are divided into two parts: industry-city integration infrastructure (package A) and mineral development (package B). Package A includes 16 sub-items including the complete integration of industry and city, the improvement of transportation channels in mining areas, and the enhancement of industrial development carriers. Package B includes the mining, processing, and sales of limestone for construction stones. The total static investment of this project is estimated to be 7.21 billion yuan, of which, industry-city integration infrastructure (package A) is 4.906 billion yuan; mineral development (package B) is 2.304 billion yuan.

Successful bidders: China Water Resources and Hydropower Fifth Engineering Bureau Co., Ltd., China Power Construction Group Railway Construction Co., Ltd., China Power Construction Group East China Survey and Design Institute Co., Ltd., China Power Construction (Beijing) Fund Management Co., Ltd., Chongqing Guixi Ecological Environment A consortium of technology limited companies.

Hydropower 5th Bureau & Power Construction Fund

Power China uses its Power Construction Fund to leverage large funds and large investments to enhance the company's financing capabilities. So specific to this case, everyone can see that the Power Construction Fund invested 500,000 yuan and jointly established a fund with the Fifth Hydropower Bureau to invest in and serve the bid-winning projects of the Fifth Hydropower Bureau.

In the Tongliang project in Chongqing, the power construction fund can be described as a full tracking service. For example, in the project bidding stage, the power construction fund is involved, so you can see that there is a power construction fund among the winning bidders of the above consortium. After winning the bid, it established a fund with the Fifth Hydropower Bureau to serve the winning project, which embodies the whole-process service concept of the Power Construction Fund.

In the previous article, I have talked about it. Now they are all investment projects, and investment projects are often funded solutions. This is not the strength of the Engineering Bureau, but the strength of financial companies such as the Power Construction Fund. Therefore, the Fifth Hydropower Bureau & Power Construction Fund formed a CP to fight, and still took a lot of projects. This has been discussed in the previous article, so I won't repeat it here.

In addition to the advantages of CP in the project construction phase, the same applies to the infrastructure operation phase. For example, on December 18, 2020, the "ICBC Rui Investment-China Water Fifth Bureau Jianmenguan Square PPP Asset Support Special Plan" was successfully established. The project issuance scale is 405 million yuan, the term is 3+3+2 years, and the priority coupon rate is 4.3%. This matter is of great significance. It was the lowest coupon rate among the ABS of similar assets of the same maturity by a central enterprise at that time, and it was also the first PPP asset securitization product of a central enterprise in Southwest China.

The main body of the credit enhancement of the project is the Electric Power Construction Co., Ltd., the operation supporter is the Fifth Hydropower Bureau, and the original stakeholder is the PPP project company controlled by the Fifth Hydropower Bureau, with the Power Construction Fund as the financial adviser. The issuance of the project has broadened the financing channels for the Fifth Hydropower Bureau and also provided an effective plan for revitalizing PPP projects through the capital market.

Innovative thinking of China Power Construction

With the continuous increase of the state's investment in infrastructure in recent years, PPP projects across the country have developed rapidly and have entered the operation period. For construction companies, the proportion of non-current assets, mainly long-term receivables, has increased. Trends have affected the company’s asset liquidity and asset turnover. Revitalizing PPP projects through such financial means as (Hydropower 5th Bureau + Power Construction Fund) can improve resource allocation, optimize asset structure, improve capital operation efficiency, and fully implement the group’s strategic deployment of “improving quality and efficiency”. Help construction companies to better serve the real economy.

Keywords: Central Enterprise Engineering News, Construction News, Central Enterprise

Therefore, this case highlights the innovative thinking of China Power Construction. At the same time, it plays a very good reference role for other construction central enterprises! Editor/Sang Xiaomei