Li Ning is divesting a stake in the Chinese sportswear company he founded.

It has been bought by talent management firm Viva China Holdings.

The founder is selling 25 per cent stake to Viva worth HK$1.36 billion (US$175 million). Viva said the purchase underlines its strategy to expand business scope across China. It would enable the two companies to explore opportunities in sponsorship and sports advertising.

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

Viva will puchase the stake through its investment holding companies Victory Mind Assets and Dragon City Management, which are both controlled by Li Ning himself and his brother Li Chun.

The transaction comes as Li-Ning reinforces its business against tough competition in China’s apparel market. A few months ago, its veteran CEO Zhang Zhiyong stepped down after 20 years; he was replaced by Li Ning.

In August, the company reported 84.9 per cent profit plunge for the six months to June 30, blamed on general industry slowdown and intensified competition.

Earlier this month, Li-Ning signed NBA superstar Dwayne Wade as its brand ambassador.

Viva’s shares rose after the news was made while Li-Ning’s shares declined as the deal suggests that the founder is gradually moving away from the business.

“Investors are unhappy with the company as it suggested that founder Li Ning is reducing his involvement,” said analyst Steve Chow of Kingsway Group Research.

GB