China Communications Con plans infrastructure fund

HONG KONG, Feb 12 (Reuters) - China Communications Construction Co (1800.HK), a top builder of highways and ports in China, said on Thursday it planned to team with banks to set up a fund to invest in infrastructure facilities on the mainland.

"It is a good way of thinking with the company identifying projects domestically and banks securing financing overseas," Fu Junyuan, executive director and chief financial officer, told reporters on the sidelines of an investor conference.

"We can sell it, or package and inject it into a listed company on completion of the project," Fu said.

Chinese enterprises face the challenge of securing and maintaining steady financing in the current economic environment, and it is even harder for smaller firms to secure financing from banks without being guaranteed by big names, Fu said.

Fu said the company had started talking to some mainland banks and Hong Kong commercial banks, but did not give a timetable for setting up the investment fund.

Fu, who declined to comment on the size of the fund, said the start-up capital of a fund for such a big investment should be at least 2-5 billion yuan ($293-$732 million).

He saw both risks and opportunities in the current economic climate, and was confident the company could achieve its target of raising its share in the domestic railway-construction market to about 10 percent in 2009-2010 from 7 percent last year.

"We have many orders on hand and I think there is no problem in meeting this target," Fu said, without elaborating.

Last September, the company said in its interim results that the value of new contracts amounted to 128.97 billion yuan in the first half of 2008, up 27.2 percent from the same period a year earlier. The backlog for the company was 268.1 billion yuan, up 12.5 percent compared with the end of 2007.

Shares of the company ended at HK$8.29 on Thursday. They have fallen 13.3 percent so far this year against a decline of about 8 percent in the broader benchmark Hang Seng Index .HSI.

(US$1=HK$7.8=6.832 yuan)