A Chinese advertising business has bought a 12 per cent stake in Birmingham City for around £3.5 million – bringing a vital cash injection into the loss-making club.

The new shareholder, named on fans’ message boards as the Beijing Triumph International Media Advertising Co, will be able to nominate two directors to the St Andrew’s board under the deal.

The transaction, confirmed in an announcement to the Hong Kong Stock Exchange, goes some way towards meeting a pre-Christmas pledge from parent group BIHL of a cash lifeline for Blues.

Football finance expert Peter Knowles said: “This is a £3.5 million deal which values the club at around £30 million. Although this has been a long and twisted tale, this would appear to be good news for Blues fans.

“It gives the principal shareholder some money to keep themselves solvent, it brings a new shareholder in and 12 per cent does not muddy the waters.”

BIHL announced before Christmas that it was aiming to raise extra funds of around £7 million for the loss-making club following the resumption of share trading, which was finally announced last week. Blues lost more than £9 million last season.

A statement from Birmingham City said: “An announcement has today been formally made to the Hong Kong Stock Exchange whereby BIHL entered into an agreement with a third party to sell 12 per cent of its share in Birmingham City PLC.

“The third party is a Beijing-based advertising business operating in the People’s Republic of China, however a confidentiality clause does not allow for the identity of individuals to be made public at this moment in time.

"It is believed that the arrangement will aid BIHL in raising further capital by utilising the third party’s connections in the Chinese market. Upon completion, the third party will also have the right to nominate up to two directors to the Boards of both Birmingham City PLC and Birmingham City Football Club PLC.”