By Wang Xu (China Daily)
Updated: 2007-08-10 11:10

Legend Holdings Ltd, controlling stakeholder of Lenovo Group Ltd, plans to sell to three investors a 29.6 percent stake in Hong Kong-listed Digital China Holdings Ltd, according to the company's filing to the stock exchange.

Digital China, the largest distributor of IT products in the country, said late Wednesday that Legend Holdings and US private equity firm General Atlantic will sell their stakes to SAIF Partners, Hony Capital, IDG Venture Partners as well as Kosalaki Investments Limited, which is owned by Guo Wei, Digital China's CEO.

Legend is expected to rake in HK$908.7 million from the sale of 259.6 million shares at HK$3.50 per share.

General Atlantic will sell its 13.34 percent stake in Digital China at the same price.

Legend, which has a stake in Hony Capital, will retain 17.83 percent of Digital China when the deal is completed.

"By bringing in new investors, we expect to enhance the corporate governance of Digital China," said Liu Chuanzhi, president of Legend Holding.

In recent years, the company has suffered declining profit margins because of increasing market competition.

Last June, it was reported the Beijing-based company was considering selling 60 percent of its IT distribution business to Ingram Micro Inc, the world's largest technology distributor.