Shenyang State-owned Assets Supervision and Administration Commission said that the sale was taking place in order to diversify the company's ownership and improve its competitiveness.

The firm is one of the major machine tool research and development firms in China. Its high-end products had an almost one-fifth share of the domestic market last year.

The Shenyang commission has set out a number of requirements for investors wishing to bid for the stake in the State-owned firm.

The commission will sell the stake to three investors with a lock-up period of five years, according to a statement issued by the company.

Overseas investors will be allowed to hold a combined stake of no more than 30 per cent.

The statement said the commission would prefer to sell the stake to large corporations from among China's top 100 manufacturers or the world's top 500 firms, or to machine industry companies.

The commission will hold a large-scale introduction and promotion conference tomorrow in Shanghai's Shangri-La Hotel, which will be attended by top company officials.

After the sale, the Shenyang commission will keep a 51 per cent stake in the firm.

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