A Case Study Of Z Trust Company Participating In Haikou Roads&Bridges Project

Since 2014,China has been pushing hard on the PPP model in the construction of infrastructure and public service project.PPP model has begun to become an important investing and financing method for the construction of infrastructure and public service projects in China.The rapid development of the PPP model has pointed a new business development direction for those trust companies which are in the transition period..In recent years,China's trust companies started accelerating transformation of their traditional trust business.On the one hand,by taking an active part in the PPP project practice,the trust companies gathered useful experience and fostered feasible methods with their continuously exploring and innovating.On the other hand,playing a role as financial institution in PPP for trust companies also helps advance the application of PPP model in infrastructure construction and public service projects in China.Z Trust Company is a relatively large trust company controlled by state-owned enterprises.In recent years,the company has been actively participating in the PPP project out of the necessity in business transformation and innovation.Through friendly consultations,Z trust company government successfully signed a cooperation agreement with Haikou municipal in 2016 and began to participate in Haikou roads&bridges PPP project as the role of private capital.By adopting case analysis method in the case the trust company participate in roads&bridges PPP project,this paper is attempting to summarize the experience and practice methods of how Z trust company take part in PPP project and to provide beneficial reference for other trust companies.Based on the analysis of the practice situation of China's trust companies participating in PPP projects in recent years,this article introduces in detail the case which Z trust company participate in Haikou roads&bridges PPP project from the aspects of participant and trading structure,operating and executing method,investing and financing mode,return on investment etc.Meanwhile,in the article existing issues are analyzed from aspects of suitability of trust fund,accessibility of project financing,among the private capital consortium the role of construction side plays,government implementation.Some recommendations for improvements are provided for the issues,for instance,(1)proper use of long-term financing in PPP project;(2)term match of trust fund raised and investment;(3)to accelerate the establishment of registration and transfer system(4)to distribute risk through the mechanism of PPP(4)to strive to lower credit risk of government.Based on the analysis,the following conclusions are reached: First,in this case there is compliant demonstration progress is and reasonable risk control.Second,forming workable private capital consortium with complementing partner strengthens competitiveness in this PPP project implement.Third,the trust fund was designed properly and it ensures the project financing.In consequence,the operation of Z trust company participating in Haikou roads&bridges PPP project proved to be a successful practice in new business field.Along with the widespread application of PPP model in construction of infrastructure and public service and necessity in business transformation and innovation for trust companies,it is believed that trust companies in growing numbers would actively take part in the PPP project.Based on the case analysis and the overall trend that China's trust companies are urgently becoming partners in PPP projects,we could be enlightened in the following aspects:(1)PPP project would probably be the substitution for government-trust business in the future.Therefore,to be an active participant in PPP project is an inevitable choice for trust companies when they are seeking ways to broaden new business.(2)Trust companies should be prepared for actively participating and expand PPP projects.(3)China needs to give legal support to trust companies and relevant financial institutions when they participate in PPP project by speeding up the legislation process and improve the legal system to mitigate fiscal risk.