The talks over the sale of stakes in China Evergrande New Energy Vehicle Group and Evergrande Property Services Group, both listed in Hong Kong, are "advancing smoothly", the source added.

The developer has been struggling to raise funds amid concerns over its financial health. Rating agency S&P downgraded Evergrande to CCC from B- on Aug. 5, having already downgraded https://www.reuters.com/world/asia-pacific/sp-global-downgrades-china-evergrande-subsidiaries-2021-08-06 it by another two notches within the preceding fortnight.

The company is also seeking buyers for a bulk of its urban renewal projects in top-tier city Shenzhen, two sources with direct knowledge said.

One of the sources said Evergrande was talking with state-owned enterprises (SOEs) and the discussions included both sale and partnership in those projects. The firm owned 55 urban renewal projects in Shenzhen, according to its 2020 annual report.

Evergrande declined to comment on the talks.

Chinese media Jiemian first reported the talks over the stake sales of the Hong Kong-listed units late on Monday.

Last week, Evergrande agreed to sell stakes in its internet unit HengTen Networks Group Ltd worth a total of $418.2 million

A unit of Evergrande said in June it would sell over half of its stake in smaller peer China Calxon Group for an undisclosed amount, giving up its control of the Shenzhen-listed firm.

Shares of Evergrande New Energy Vehicle closed up 3.6% in Monday trading on the Hong Kong Stock Exchange, while Evergrande Property Services jumped 9.7%.

(Reporting by Clare Jim; Editing by David Goodman and Bernadette Baum)

By Clare Jim