CIFI Holdings (Group) Co. Ltd. (SEHK:884) is selling shares in a subsidiary to ease its liquidity crisis, the mainland developer said. The Shanghai-based cash-strapped developer was considering the disposal of its entire interest in CIFI Ever Sunshine Services Group Limited (SEHK:1995), a property ­management services provider, through a public bidding process, it said on its website.

CIFI holds a 23.26% stake in CIFI Ever Sunshine. A liquidity crisis was looming for the company because of adverse market conditions, financing difficulties and the ­challenges facing the mainland property industry, CIFI said. The asset sale would "create liquidity for the group and/or allow the group to de-lever", the firm said in the statement.

If the sale goes through, the company is expected to raise about HKD 2.55 billion based on CIFI Ever Sunshine's HKD 6.26 closing price on December 09, 2022. "In our view, CIFI would benefit from a better liquidity position after the potential disposal," said Will Chu, an analyst at CGS-CIMB Securities. The stake sale might be a way for CIFI to acquire funds in Hong Kong dollars to help service its offshore debt and might add to its liquidity in the long run, though its shares would come under ­pressure in the short term, Chu added.

The developer said in a filing on November 1 with the Hong Kong stock exchange it would suspend payments on all its offshore bonds and had terminated all discussions with individual creditors and creditor groups offshore. December 12, 2022, it said its trading in debt securities would remain suspended until further notice. Property stocks slumped ­yesterday, with the Hang Seng Mainland Properties Index losing 7.53%.

CIFI, meanwhile, dropped by 7.32%, Country Garden Holdings fell by 5.23% and Seazen Group plunged by 16.5%. CIFI Ever Sunshine dropped by 12.14% to HKD 5.50.