Chinese conglomerate Nanshan Group has bought most of Air New Zealand’s 25.9 per cent stake in Virgin Australia in a deal worth $232.6 million.

The Kiwi-based carrier is selling 19.98 per cent of its stake at $0.33 per share to Nanshan, which is looking to expand its aviation arm and has its own emerging airline, Qingdao Airlines, which it launched in 2014.

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Air New Zealand owned a 25.9 per cent stake in Virgin Australia, but the airline had previously flagged it planned to unlock the cash tied up in its Virgin Australia shareholding for other uses following a falling out with Virgin Australia boss John Borghetti.

“We believe Nanshan Group will be a very strong, positive and complimentary shareholder for Virgin Australia,” said Air New Zealand chairman Tony Carter in a statement released to the New Zealand stock exchange.

“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 deal is still subject to regulatory approvals from Chinese authorities.

In March this year, Air New Zealand boss Christopher Luxon quit the board of Virgin after a failed bid to oust Mr Borghetti and announced plans to part ways with Virgin Australia which sent Virgin’s share price into a tailspin.

Chinese investors already own 13 per cent

Air New Zealand said it was mulling options over its remaining 6 per cent shareholding in Virgin Australia.

In May, Mr Borghetti took the Kiwis by surprise when Virgin Australia struck a deal with another Chinese company, HNA Aviation, which now owns a 13 per cent stake in the Australian airline.

Shares in Virgin Australia finished at $0.30 in Wednesday’s session, well below the $2.36 peak before the financial crisis hit in 2007.

In a statement released to the ASX, Virgin Australia said it “looks forward to meeting with Nanshan Group over the coming weeks to discuss the proposed acquisition”.

Virgin is controlled by a collection of airlines including Etihad, Singapore Airlines and Richard Branson’s Virgin Group.