HONG KONG, CHINA - HONG LEONG Group, owned by Singapore billionaire Kwek Leng Beng, may sell its 90 per cent stake in Xinfei, China's No. 3 refrigerator-maker by market share, in a deal that could fetch more than US$700 million (S$968 million), a source with direct knowledge of the deal said yesterday.

Hong Leong has hired a major international investment bank to explore strategic options for Xinfei and may sell its stake to a strategic buyer, said the source who declined to be identified because of the confidential nature of the deal.

Hong Leong and Xinfei both declined to comment.

Shares of Hong Leong Asia, the Singapore-listed arm of the Hong Leong Group, rose more than 6 per cent to S$2.34 per share yesterday after the Reuters news report.

'Xinfei is a household name in many parts of China. For global players eyeing a foothold in China, Xinfei could be a good target,' said Great Wall Securities analyst He Qifeng.

'It's important to grow bigger in China's competitive home-appliance market as, eventually, there're likely to be only very few brands left,' he added.

International as well as Chinese home-appliance business leaders such as Japan's Panasonic and Haier Group, a strong domestic competitor of Xinfei, are expected to be interested in a sale of Xinfei, the source said.

Other potential buyers could include two Chinese industry leaders, TCL and Konka Group, and European home-appliance maker Electrolux, said the source.

Hong Leong won control of Xinfei in 2005 after a series of investments, making Xinfei a Sino-Singapore joint venture, based in the central Chinese province of Henan.

Hong Leong's investment in Xinfei drew public and media attention in China, where buyout deals were rare, as Beijing was reluctant to sell national brands and industry leaders to foreign investors.

Mr Teo Tong Kooi, chief executive of Hong Leong Asia, is also the chief executive of Xinfei, according to Xinfei's website.

A team of bankers and accountants has been set up and assigned to the deal, designated Project White internally, and some potential buyers have been approached by Hong Leong's deal adviser, though no formal plan has been fixed, said the source.

Apart from its core business of refrigerators, Xinfei, which is branded in English as Frestech, also makes other major home appliances, such as air-conditioners and freezers.