Chinese train project financing is signed

HSH Nordbank has closed a US$30mn project financing to support the construction of three custom-made luxury trains to operate on the Beijing-Lhasa and Beijing-Lijiang routes. The project is aimed to open up Western China to the luxury tourist market.  

The rail cars are being made in China by BSP, the Canadian transport manufacturer Bombardier's joint venture in China. Each train is equipped with 12 sleeper cars, two dining cars and a lounge car.

The total financing for the project stands at US$140mn. The US$30mn project financing is being lent to RailPartners. Shareholders in Railpartners include Shanghai firm TZG Holdings, a company focused on China's leisure sector, Wing On Travel, Hong Kong’s largest travel agency, and PYI Corporation, a Hong Kong firm focused on the infrastructure and logistics sector.

Around $45mn of the total costs is being financed by the shareholders of Railpartners, with the rest being raised via project financing.

In arranging this project, Railpartners entered into a 50-year joint-venture with the state-owned Quinghai-Tibet Railway Corp, which falls under the management of the Chinese ministry of railways. The Qinghai-Tibet railway was completed in December 2006.

"This unique Tangula transaction underlines our expertise in financing complex transportation and logistics projects," comments Peter Rieck, deputy chairman of HSH Nordbank.

“However, the commitment and experience of the parties involved was also central for us when we entered this transaction.”

China is the largest tourism market in Asia, as well as being one of the fastest growing. However, the infrastructure for luxury tourism in the Western provinces and Tibet still requires a lot of development.

“Tangula Luxury Trains is a fascinating project in the specialised, but fast growing, luxury train market. In Asia, this market has significant potential”, comments Mathis Shinnick, global head of transportation at HSH Nordbank.