Business

China's Nanshan buys 20% Virgin Australia stake

Virgin Australia plane Image copyright Getty Images

The Chinese group Nanshan has bought a 20% stake in Virgin Australia from Air New Zealand.

It is the second Chinese firm after the HNA Group to invest in the Australian carrier, which hopes to benefit from growing numbers of China tourists.

More than one million mainlanders visited Australia last year and that is forecast to grow to 1.5m by 2020.

Shares of Virgin Australia, which plans to launch direct flights to China next year, rose by 5.4% on Friday.

Shares of Air New Zealand rose by more than 3% in Wellington trading following the news.

Nanshan will pay 33 Australian cents a share for the slice of the company, valuing it at about 230m Australian dollars (£118m; $170m).

Aside from Nanshan and HNA, Singapore Airlines and Etihad Airways are also major shareholders in Virgin Australia.

Last month, HNA bought 13% of Virgin Australia for $118m but plans to raise that stake to about 20% in the future.

"We believe Nanshan Group will be a very strong, positive and complimentary shareholder for Virgin Australia," Air New Zealand Chairman Tony Carter said in a statement.

"The sale will allow Air New Zealand to focus on its own growth opportunities, while still continuing its long-standing alliance with Virgin Australia on the trans-Tasman network".

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