(Yicai Global) Oct. 29 -- China's Hillhouse Capital Group, which has invested in Midea Group and Konka Group, will buy the biggest stake in air-con giant Gree Electric Appliances to enlarge its portfolio of home appliance makers.

Gree Group, controlled by the Zhuhai government, has decided to sell a 15 parent stake to Mingjun Investment Partnership, a private equity fund backed by Hillhouse Capital, the Zhuhai-based target firm said in a statement yesterday, without disclosing financial details. But based on Gree's market cap, the deal could be worth CNY40 billion (USD5.7 billion).

Hillhouse Capital, which already had a 0.72 percent stake in Gree, has contacted the target firm's management regarding cooperation. 

Hillhouse Capital will need to convince Gree's management about being a top priority as the Beijing-based private equity firm has invested in many Chinese rivals before. However, Gree could also benefit from collaborating with other Hillhouse-backed firms, such as real estate agency Lianjia, electric carmaker Nio, and telecoms infrastructure firm China Tower.

In April, Gree announced its plan to sell the stake, and firms such as Baidu, Singapore's Temasek Holdings, and Hopu Investment Management, sought to buy the shares.

Gree's [SHE: 000651] stock price rose by 2.97 percent to CNY58.67 (USD8.31) this morning. 

Editor: Emmi Laine