AI boom gifts Lenovo parent golden handcuffs

Alibaba Holding

07/10/2026 03:36

The author is a Reuters Breakingviews columnist.  The opinions expressed are his own.
By Ka Sing Chan
HONG KONG, Oct 7 (Reuters Breakingviews) - Legend Holdings 3396.HK has hit the jackpot with Lenovo 0992.HK, at least in theory. Thanks to the artificial intelligence boom, the Chinese state-backed investment firm has seen the value of its 31% stake in the PC-and-server maker more than triple to $17 billion this year. Yet the $7 billion parent trades at a huge discount to its net asset value. Closing that will be a long slog.
Founded by 11 scientists from the prestigious Chinese Academy of Sciences in 1984, Legend was the country's first technology company, initially manufacturing cards that allowed computers to display Chinese characters, and eventually PCs. That business was later rebranded as Lenovo, while Legend became an investment holding company. But while the parent's holdings span private equity, banking, agriculture and more, the PC maker continues to be Legend's crown jewel today, accounting for over half of its total assets and generating 92% of its revenue in the six months to June.
Lenovo's AI-fuelled rally is both a blessing and a curse to its owner. Legend regards the holding as a core strategic asset that's key to its identity, and far from exiting actually increased its stake last year. It's a sharp contrast to Masayoshi Son's SoftBank Group 9984.T, which capped one of the most lucrative technology bets on record by concluding the sale of its Alibaba 9988.HK shares in 2024. Son is now aiming to replicate that success with OpenAI.
In stark contrast, Legend's other investments look underwhelming. These include a manufacturer of advanced polymers and chemicals, as well as one of the China's biggest fruit farm operators.
At least Legend is monetising other parts of its business. It is exploring a sale of a 90% stake in Banque Internationale à Luxembourg that could value the European lender at more than $2.8 billion, the Financial Times reported on September 20, citing people familiar with the matter. A disposal would mark the first major step to tackle the 75% discount to net asset value - per Citi estimates - that Legend trades on.
Amsterdam-traded Prosus PRX.AS offers a cautionary lesson. The Dutch company was listed by Johannesburg-based Naspers NPNJn.J, which struck gold with its 2001 Tencent 0700.HK investment. But that 20%-plus stake, housed in Prosus along with other tech bets, can't easily be sold down without incurring a tax loss, and has contributed to a stubborn 40% discount the Dutch group trades on to its net asset value. Ridding Legend of its own golden handcuffs looks like an equally daunting fix.
 
CONTEXT NEWS
Legend Holdings is working with Goldman Sachs to sell its 90 per cent stake in Banque Internationale à Luxembourg. Initial bids are due around the end of this month and could value the group at roughly €2.5bn ($2.8 billion) or more, according to people familiar with the matter, Financial Times reported on September 20. 
Legend Holdings owns a 31.4% stake in computer-to-AI firm Lenovo. The stake is worth over $17 billion after a tripling in share price this year. 

(Editing by Robyn Mak; Production by Aditya Srivastav)
((For previous columns by the author, Reuters customers can click on CHAN/ KaSing.Chan@thomsonreuters.com))