(Yicai Global) July 27 -- Shares in Greenland Holdings clawed their way back up this afternoon after hitting the exchange-imposed limit down on the news that the Shanghai government, which holds just under 50 percent equity in the Chinese real estate firm, is to sell up to 17.5 percent of its stake to bring in fresh investment and make the developer more market-oriented.

Greenland Holdings [SHA:600606], which had suspended trading since July 21, plunged 10 percent on the opening of markets today. It recovered to trade down 1.69 percent at CNY7.56 (USD1.08) this afternoon.

The introduction of new strategic shareholders will make Greenland more market-oriented, shake up its management practices and release the full potential of economic reform, Chairman and President Zhang Yuliang said yesterday.

State-owned Shanghai Land Group and the Shanghai Municipal Investment Group are the second and third largest shareholders in Greenland, with 25.82 percent and 20.55 percent stakes respectively. The largest stakeholder is an employee shareholding group called Shanghai Greenland Investment that holds 29.13 percent of equity.

Although the new capital structure will lead to major changes in the company’s controlling framework, it will remain state-backed, the firm said in a statement yesterday. Greenland will not have any other controlling shareholders or controllers after the deal, it said.

The firm's net profit in the first half was down 10.79 percent to CNY8 billion (USD1.1 billion). However its revenue over the same period was up 4.14 percent year on year to CNY209.9 billion (USD30 billion).

Greenland was set up in 1992 as a state-owned enterprise. It introduced employee shareholding in 1997 and strategic investors in 2013. The firm listed on the Shanghai Stock Exchange in 2015 with an issue price of CNY25.10 (USD3.58). Its share price has since fallen to less than one third of this with a market capitalization of just CNY91.99 billion (USD13.14 billion).

Editor: Kim Taylor