The purchase of a stake in Lenovo's parent company, Legend Holdings, by a private investment group could be followed by more moves away from Chinese government influence in the company, Legend said Tuesday.
The Chinese Academy of Sciences, a state-controlled high-tech research institute and the largest stakeholder in Legend, is reducing its holding in the company to bring it closer to the private sector. The academy wants market experience to play a bigger role in the corporate governance, management and marketing of its subsidiaries, it said in a joint statement with Legend.
In a step toward that goal, the academy is selling a 29 percent stake in Legend to China Oceanwide Holdings Group, a private conglomerate, for 2.76 billion yuan (US$404 million), Legend said last week.
The move comes as Lenovo, the world's fourth-biggest PC maker, struggles to recover from a major hit to its sales from the global economic crisis. The company this year began restructuring to bring its focus back to emerging markets and has posted net losses for the last three quarters. Legend is responsible for strategic guidance and governance for subsidiaries including Lenovo, Legend said.
"Many clients abroad may think Lenovo is a nationally-controlled company," Liu Chuanzhi, the chairman of Lenovo and newly named chairman of Legend, said at a briefing. "China Oceanwide's entrance makes even clearer that Lenovo is a private enterprise."
The state academy will still retain a 36 percent stake in Legend, remaining the company's biggest investor, but it may move to end that status. The academy aims to reduce its stakeholding in companies to below 35 percent by 2010, it said.
Legend also hopes eventually to list on a stock market, Liu said, a move that could dilute the academy's holdings in Legend.
Executives declined to comment on what business deals might be reached between the companies held by Legend and China Oceanwide, but said there was room for cooperation. Legend's subsidiaries besides Lenovo are focused on equity investment and real estate, while China Oceanwide has holdings in industries like real estate, finance and energy.
Legend is also an investor in a new $115 million angel investment fund launched this week by Kai-Fu Lee, Google's former China head.