Olympic gymnast Li Ning sells 25% stake for $175m

The founder of Li Ning Co Ltd is selling a 25 percent stake in China's best-known sportswear group to his talent management firm Viva China Holdings Ltd for HK$1.36 billion ($175 million), as the sports sector grapples with an economic slowdown and fierce competition.

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Viva China is controlled by Olympic gymnast Li Ning, the founder and chairman of the company that bears his name and which is backed by US private equity group TPG Capital and Singapore sovereign fund GIC.

In a filing to the Hong Kong bourse, Viva said it would buy 266.37 million Li Ning shares, or a 25.23 percent stake, from Victory Mind Assets Ltd and Dragon City Management (PTC) Ltd, which are controlled by Li Ning and his brother, Li Chun.

Viva did not hold any Li Ning shares prior to the deal.

"The transaction is not expected to result in any change to the business strategies, management and day-to-day operation of the group," Hong Kong-listed Li Ning said in a statement.

Viva said the purchase was aimed at expanding its business scope in China in the sports sector and it would enable the two companies to explore strategic development opportunities in sports advertising and sponsorship.

The Hong Kong-based company said it would settle the deal through the issue of new shares after consolidating 5 existing shares into one. Trading in shares of both companies will resume on Wednesday.

Shares of Viva, which has a market value of $160 million, are down nearly 37 percent so far this year.

Li Ning, which competes with local brand Anta Sports as well as Adidas and Nike, announced last week a partnership deal with NBA All-Star Dwyane Tyrone Wade to promote and develop basketball in China.

Last Friday, Li Ning said its chief financial officer, Chong Yik Kay, had resigned, marking the latest departure from senior management as the company grapples with a slowdown in the world's second-largest economy.

That news came three months after the company, whose share price has dropped by more than half since March, named Li Ning and TPG managing director Kim Jin-Goon to lead the company after then-CEO Zhang Zhiyong quit.

In August, Li Ning posted an 85 percent slide in first-half net profit as unsold inventories piled up. Marketing costs rose and it warned full-year revenue would fall, and said it may post a loss.