HONG KONG -(Dow Jones)- Tycoon Li Ka-shing’s charitable foundation is set to become the second-biggest shareholder of China Timber Resources Group Ltd. (0269.HK) after the fund and several investors entered into deals to buy shares in the Hong Kong-listed company to help fund its plan to buy toll-road assets in Inner Mongolia.

China Timber said in a statement Friday that Li Ka Shing Foundation Ltd. agreed to buy 3.0 billion new shares in the company at HK$0.40 each, valuing the investment at HK$1.2 billion. The foundation will own a 12.85% stake in China Timber after the company completes its share placements.

The sale price represents an 8.1% premium to China Timber’s closing share price Tuesday of HK$0.37 before it was suspended ahead of the sale announcement.

In addition, CEF Holdings Ltd., a joint venture between Li’s flagship firm, property developer Cheung Kong (Holdings) Ltd. (0001.HK), and Canadian Imperial Bank of Commerce (CM), agreed to subscribe to 500 million China Timber shares at HK$0.40 each, representing a stake of 2.14% when the share placement is complete.

Separately, the timber logging and trading firm said it will sell 1.5 billion shares, or 6.42% of its enlarged share capital after the fundraising exercise, to a unit of blue-chip insurer China Life Insurance Co. (LFC), also for HK$0.40 a share.

China Timber’s fundraising exercise, which includes share sales to private-equity firm Themes Investment Partners and other institutional investors, is part of the company’s plan to diversify its business by buying a toll-road in Inner Mongolia designed for heavy-duty coal transportation purposes for CNY3 billion.

The 265-kilometer-long expressway is around 20% complete and opening is scheduled for January 2013, according to China Timber.

Li Ka Shing Foundation will become the second-biggest shareholder of China Timber behind China Alliance International Holding Group Ltd., which will have a stake of 18.31%, down from 29.39% at present.

Li Ka-shing, who is also chairman of Hong Kong conglomerate Hutchison Whampoa Ltd. (0013.HK) and one of Asia’s wealthiest people, has donated a sizable portion of his wealth to his charitable foundations and has pledged to leave them a third of his fortune.

Li Ka Shing Foundation’s other investments include 3 billion of Bank of China Ltd.’s (3988.HK) Hong Kong-traded shares, or about 4% of the bank’s outstanding H shares.

Li Ka Shing Foundation spokeswoman Laura Cheung said Monday it had no further comment at this stage.

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