China's Suning, Hony Capital to invest $420 mln in PPTV

* Suning stake will be 44 percent of PPTV

* Deal values PPTV at $568 million

* Suning calls deal "strategic investment"

* Suning shares up 58 pct year-to-date

By Paul Carsten and Donny Kwok

BEIJING/HONG KONG, Oct 28 (Reuters) - China's Suning Commerce Group and Hony Capital, an affiliate of Lenovo Group, will invest $420 million in PPTV, a Chinese online TV services provider, Suning said in a statement on Monday.

Suning will invest $250 million to buy a 44 percent stake in PPTV and become its largest shareholder. It is believed Hony Capital will make up the remaining $170 million although the statement did not specify that. The deal values PPTV at $568 million.

Trading in Suning shares was suspended on Monday and will resume on Tuesday.

"It is a key step for Suning to become a fully Internetised company and is an important step in speeding up its transformation process," Suning Vice Chairman Sun Wei-min said via microblog service Weibo.

Suning, which competes with GOME Electrical Appliances Holdings Ltd backed by U.S. asset manager Bain Capital, has been forced to rethink its business model and expand into areas such as Internet services and e-commerce to chase a growing number of Internet shoppers.

PPTV is the largest online TV service in China with more than 340 million users and offers sports, entertainment, news and other video content, according to its website ().

Online TV is gearing up to be hotly contested as Chinese Internet firms like Alibaba Group Holdings, Baidu Inc and Xiaomi Tech have all recently expanded into the business, vying with more experienced companies like Sohu Inc and Youku Tudou Inc.

Hony Capital is sponsored by Legend Holdings, the parent of the Hong Kong-listed Lenovo Group, the world's number one PC manufacturer.

According to Standard & Poor's Capital IQ database, Hony Capital has invested in media and online TV businesses including TV advertising production firm Beijing Galloping Horse Film & TV Production Co Ltd, media company Happigo Home Shopping Co Ltd, and iQIYI.com Inc, an online television and movie portal operator in China of which Baidu owns a controlling share.

With the traditional PC sector on the decline, Lenovo has accelerated its foray into mobile devices, rapidly rising to become the No.2 smartphone vendor in China, the world's largest smartphone market.

Shares of Suning have soared nearly 58 percent so far this year, outpacing a 6 percent drop in China's CSI300 Index .