Toll roads can be some of the most mature, transparent and easy to understand assets in the infrastructure class. Charging drivers to use time-saving, well-located expressways in areas with strong underlying fundamentals makes good sense, and there is now considerable international acceptance of tolling by road users. For investors they represent a nice portfolio balancer offering solid annual yields with strong prospects of outperformance.
China has long embraced the toll road model and has ambitious plans to expand its expressway network. There are more than 60,000 kilometers of existing expressways in China — most of which are still in the hands of cash-strapped provincial governments. These same governments are charged with delivering an additional 50,000 kilometers of new expressways by 2020, but without sufficient funds to do so. This is where the opportunity lies for foreign private equity.
Add to this high growth, booming car sales and predicted rat