America Online in China.com purchase before shares debut

United States internet giant America Online (AOL) has bought a 10 per cent stake in China.com Corp - majority owned by New World Infrastructure - just days ahead of its US$50 million listing on Nasdaq.

The deal highlights AOL's regional expansion strategy and follows an existing agreement with China.com affiliate company, China Internet Corp, to launch an Internet service in Hong Kong later this year.

The acquisition provides AOL with a potential springboard into the mainland, according to internet analyst Pete Hitchen, of IDC Market Research.

'AOL is making a lot of effort to move into the Asia Pacific market.

'We are going to see increasing [incidences] of AOL buying stock in companies with a presence in Hong Kong but with ambition to move into the mainland market as well.' As a shareholder, AOL will add weight and credibility to China.com's share listing, Mr Hitchen said.

'The attraction of the very young stock is going to be very high because they will have AOL as an owner. This is despite the fact that it is worth relatively little.' New World Infrastructure last week boosted its stake in China.com from 12 to more than 20 per cent, making it the majority shareholder.

Xinhua is also a shareholder in China.com, although the size of its stake has not been disclosed.