China’s Nanshan buys Virgin Australia stake from Air New Zealand

China’s Nanshan is set to grab a major slice of Virgin Australia with the purchase of a 19.9pc stake from Air New Zealand.

Air New Zealand put its stake in Virgin up for sale in March.

Air New Zealand has sold the vast majority of its stake in Virgin Australia to Chinese conglomerate Nanshan Group for over $260 million.

The sale will see Nanshan take a 19.98 per cent stake in Virgin Australia (VAH).

Under the deal Nanshan - a large, privately owned Chinese conglomerate with interests across a diverse range of including its own airline, Qingdao Airlines - will pay Air New Zealand 33c a share for the stake.

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

“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.”

The sale price is a slight premium on the 30c a share sale that Virgin announced last week with another Chinese conglomerate HNA.

Under that $159m deal HNA will take a 13 per cent stake in Virgin through the placement of new shares. That deal will dilute Virgin shareholders’ current stakes in the company.

Both the Nanshan and HNA deals remain subject to Chinese regulatory approvals.

Virgin Australia is now bursting at the seams with airlines as its major shareholders including Singapore Airlines, Etihad Airways, Nanshan Group, HNA and Sir Richard Branson’s Virgin Group.

The flurry of activity on Virgin’s share registry comes as the airline continues to work through a wide ranging review of its capital structure.

Analysts say the airline could need as much as $1 billion to repair its balance sheet, which has been weighed down by expenses to upgrade and refit its fleet of aircraft to better compete with Qantas for big-ticket corporate and government customers.

It is understood that Nanshan Group intends to support the outcome of that review.

Air New Zealand said options regarding its remaining 6 per cent shareholding in Virgin will be considered by in due course.