Viva China buys 25 percent stake in Li Ning

The Chinese sports apparel retailer Li Ning Co is selling

off 25 percent of the company to Viva China Holdings Ltd (HKG: 8032), a sports talent firm, as reported by the ‘Wall Street Journal’.

According to a statement to the Hong Kong Stock Exchange issued by Li Ning on Wednesday, he and his brother are selling 266.4 million shares in the retailer to Viva China, a holding firm that is 56 percent controlled by the family.

Shares of the company fell 4.8 percent to 4.60 Hong Kong dollars while Viva China shares almost doubled to 12 Hong Kong cents.

As reported by Bloomberg, Viva China could sell some of its Li Ning shares if it needs to raise funds, said Forrest Chan, a Hong Kong-based analyst at CCB International. “What worries investors is Viva China’s track record in property investments,” said Chan. “Viva China may require further capital investments or fundraising. The deal puts Li Ning investors at a disadvantage should Viva China need to raise funds in the future.”

It is worthy of mention that Li Ning is going through a comprehensive business restructuration, aimed to renew its senior management and to reposition its brand. The core goal behind this overhaul is to improve profitability while taking broader market share in China.