Dalian Wanda Group has agreed to sell a 17 per cent stake in Atletico de Madrid to Quantum Pacific Group controlled by Israeli billionaire Idan Ofer, the latest move by the Chinese conglomerate to cut its debt, the Spanish soccer club said on Wednesday. Quantum Pacific’s stake in the football club will rise to 32 per cent, but the club stopped short of disclosing the deal’s value. In 2015, Wanda bought a 20 per cent stake in the football club for US$52 million, the first time a Chinese company had invested in a premier European football club. Wanda too declined to give further details on the latest divestment. The club said Wanda remains a sponsor and its stadium will continue to be called Wanda Metropolitano. Group founder and chairman Wang Jianlin said in January that the group will further reduce debt “through all available means”, including the sale of non-core assets and stake disposals. Wanda plans to bring down debt to “an absolutely safe level” and “avoid any credit default globally” in two to three years, according to a speech by Wang to staff members that was cited by the company’s website on January 21. Offshore groups wholly or partly owned by Wanda have US$10.7 billion in outstanding long-term debt, according to S&P Global Market Intelligence. “The latest divestment reflects Wanda’s aim to focus on its mainland businesses and get money to ease its liquidity pressure,” said Eric Liu, managing partner of Zhao Sheng Law Firm. “It is also a move to comply with China’s policy on overseas deals as sports clubs are among the sectors that authorities discourage.” More such divestments from Chinese acquirers could be seen to follow Beijing’s call to get out of the sectors it frowns upon on, he added. China stepped up scrutiny on outbound investments in late 2016. The central government began targeting “irrational” deals – often involving high-profile hotels, cinemas and sports clubs – after outbound investment in 2016 rose to an all-time high of US$170 billion, causing the value of the yuan to fall, which sparked massive capital outflows. Private conglomerates including Wanda were put under the spotlight by the mainland government last year for running up large debts to fuel acquisitions. According to leaked emails seen by the South China Morning Post in June 2017, China’s banking regulator had singled out Wanda, Fosun International, Anbang Insurance and HNA Group – the country’s most aggressive global asset buyers – as risky borrowers and told banks to be cautious in lending to them. Wanda has been one of the biggest acquirers before the scrutiny was intensified. The company has made headlines with a spate of acquisitions, including a 2012 takeover of AMC Theatres for US$2.6 billion, and the US$3.5 billion acquisition in 2016 of the Hollywood studio Legendary Entertainment.