(Yicai Global) Jan. 24 -- Shares of Agile Group Holdings soared after the stressed Chinese developer said it expects to gain about CNY698.7 million (USD110.4 million) from the sale of its stake in a Guangzhou property joint venture.

Agile [HKG: 3383] closed up 7.4 percent at HKD4.52 (58 US cents) today, pulling back from an 8 percent surge. The wider Hong Kong market finished 1.2 percent lower.

The company has agreed to sell its 26.7 percent stake in Guangzhou Lihe Real Estate Development, one of the builders on the Guangzhou Asian Games City project, to a unit of state-owned China Overseas Land & Investment for CNY1.84 billion (USD291 million), Agile said in a stock exchange filing earlier today.

COLI will become the project’s largest investor after the deal is completed.

Shimao Group Holdings is also in talks with COLI to offload its stake in the project, Cailian Press reported today, citing sources familiar with the matter.

The latest divestment by Agile comes after the Guangzhou-based homebuilder sold a number of non-core property assets for a total of CNY2.8 billion in the second half of last year.

The southern city of Guangzhou hosted the Asian Games in 2010. A consortium of Agile, COLI and Country Garden Holdings won the tender for the Guangzhou Asian Games City project with a CNY22.5 billion bid, beating another group comprising COLI and other firms.

Agile and the other two established Lihe Group in 2009 to develop the project, with Shimao joining in later.

The total construction area of the project is about 5.9 million square meters. The property has a built-up area of about 4.1 million sqm and is expected to be completed by the end of 2025. COLI will hold a total of 46.66 percent of Lihe Group after the transaction, with the two other major developers, Country Garden and Shimao, owning 26.67 percent each.

Though Agile is selling assets to raise funds, international ratings agencies have still downgraded the company. Agile said on Jan. 21 that S&P Global Ratings had cut its long-term rating from BB- to B+ with a negative outlook. Moody’s also lowered its rating with a negative outlook.

In this regard, Agile said that its open market bonds were all paid on schedule, and production and operations were proceeding normally. It will make arrangements in advance for maturing debt to ensure timely payment. The lower ratings are not expected to have an adverse material impact on solvency, it added.

Editor: Peter Thomas