(Yicai Global) July 6 -- Shares of Suning.Com jumped after the Chinese e-commerce giant said its shareholders will sell a nearly 17 percent stake in the firm for CNY8.8 billion (USD1.4 billion) to investors, including local government entities and Alibaba Group Holding, after losses deepened this year.

Suning.Com's stock price [SHE: 002024] climbed by the daily limit of 10 percent to CNY6.15 (95 US dollar cents) intraday. The shares have declined almost by a fifth in value this year.

The retailer's largest shareholder Zhang Jindong and persons acting in concert, as well as Suning Appliance Group and Tibet Trust, will transfer the equity to Jiangsu Xinxin Retail Innovation Fund II, the Nanjing-based company said in a statement yesterday. The price per share was CNY5.59 based on the closing price of June 15, logged before a trading suspension began.

The State-owned Assets Supervision and Administration Commissions of the local governments of Jiangsu province and Nanjing took the lead in establishing the CNY8.8 billion fund, and invited investors such as Huatai Securities, Xiaomi, Haier, Midea, and TCL to participate in it.

After the transfer, Zhang and persons acting in concert will remain the e-commerce firm's largest shareholder with a nearly 20.4 percent stake. Taobao China will be No. 2 as it holds 20 percent of the equity. Jiangsu Xinxin Retail Innovation Fund II will become the third-biggest shareholder.

Deepening Losses

The company simultaneously revealed its first-half earnings. Losses widened to a sum between CNY2.5 billion and CNY3.2 billion, rising as much as 19 times from a year ago, due to recent challenges.

Revenue was expected to have dropped by more than 30 percent in the second quarter from a year earlier, resulting in a large decline in gross profit, the firm explained.

Another deal fell through. Last February, Suning.Com said that the company’s shareholders were planning to sell a 23 percent stake for CNY14.8 billion (USD2.3 billion). Shenzhen International Holdings was intending to buy almost a third of the offered equity. But the parties failed to finalize contract terms, Suning.Com said yesterday.

Editor: Emmi Laine, Xiao Yi