Beijing Yanjing Brewery Co, China's third-largest beermaker, plans to sell about a 20 percent stake to a foreign strategic partner, according to people with knowledge of the matter.

The company, which is backed by the Beijing municipal government, has reached out to potential investors including overseas brewers, two of the people said.

The stake could be valued at about $700 million based on Yanjing's current share price, according to data compiled by Bloomberg.

President Xi Jinping has been encouraging State-owned enterprises to bring in outside investors and boost competitiveness as part of the nation's most sweeping economic reforms since 1978. Such a deal would give Yanjing, the only major Chinese brewer without an overseas partner, access to foreign know-how and technology to counter slowing sales growth in the world's second-largest economy.

Yanjing shares rose 1.7 percent to 7.93 yuan in Shenzhen on Monday, giving the company a market value of $3.6 billion. An official in Yanjing's investor relations department, who would not give her name, said she was unaware of the plan.

State-backed China Resources Enterprise Ltd produces the nation's best-selling Snow Beer through a joint venture with UK brewer SABMiller Plc. Tsingtao Brewery Co, the country's second-largest beermaker, is 19.99 percent owned by Japan's Asahi Breweries Ltd, according to its 2013 annual report.

Anheuser-Busch acquired control of Harbin Brewery Group Ltd, based in northeastern China's so-called Ice City, for $738 million in 2004, data compiled by Bloomberg show. The Harbin brand is now sold by Anheuser-Busch InBev NV, which took over Anheuser-Busch in 2008.

Yanjing is controlled by Hong Kong-listed Beijing Enterprises Holdings Ltd, whose largest shareholder is an investment arm of the capital city's government, according to the Beijing Enterprises annual report.

(China Daily USA 02/10/2015 page16)