Chinese developer CIFI to sell shares worth US$327.8 million in property-management unit to ease liquidity crisis

The developer is considering the disposal of its entire stake in CIFI Ever Sunshine Services Group through a public bidding process

CIFI will benefit from better liquidityafter the potential disposal, CGS-CIMB Securities analyst says

Reading Time:2 minutes

The cash-strapped developer is considering the disposal of all its shares in CIFI Ever Sunshine Services Group, in which it holds a 23.26 per cent stake. Photo: Handout

Published: 5:30pm, 12 Dec 2022

CIFI Holdings Group is disposing of shares in a subsidiary to ease its liquidity crisis, the Chinese developer said on Monday, joining a flurry of asset sales by similarly indebted developers.

The Shanghai-based cash-strapped developer is considering the disposal of its entire shareholding interest in unit CIFI Ever Sunshine Services Group, a property-management services provider, through a public bidding process, it said in a statement on its website. CIFI holds 23.26 per cent of the shares of CIFI Ever Sunshine.

The company is facing a liquidity crisis because of adverse market conditions, financing difficulties and the challenges the Chinese real estate industry is currently facing, it said. The asset sale would “create liquidity for the group and or allow the group to de-lever”, it said in the statement.

If the stake sale goes through, the company is expected to raise about HK$2.55 billion (US$327.8 million) on the basis of the closing price – HK$6.26 – on Friday of CIFI Ever Sunshine stock.

“In our view, CIFI would benefit from a better liquidity position after the potential disposal,” said Will Chu, 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 the firm’s liquidity in the long run, though it will add some pressure on its share performance in the short term, Chu added.