(Yicai Global) Sept. 29 -- Shares in China Evergrande Group soared as much as 16 percent today after the struggling property developer said that it will secure CNY10 billion (USD1.5 billion) by selling part of its equity in Shengjing Bank to help repay its mountain of debts.

Evergrande’s share price [HKG:3333] closed up 14.98 percent at HKD3.07 (USD0.39), ending a six-month losing streak which has seen the stock lose 80 percent of its value. Earlier in the day it had reached HKD3.12.

Evergrande will sell 20 percent of Shengjing Bank to a state-owned investment firm in Shenyang, northeastern Liaoning province at a price of CNY5.70 (USD0.90) a share, it said today. Shenyang Shengjing Finance Investment Group will be the bank's largest shareholder after the transaction and Evergrande the second biggest with 14.57 percent equity.

The introduction of a state-backed business as a new major shareholder will help stabilize the bank's operations and also help boost the value of the remaining shares held by Evergrande, the Shenzhen-based firm said.

Shengjing Bank posted net profit of CNY1 billion (USD128.5 million) in the first half and had assets of CNY81.1 billion (USD12.5 billion) as of June 30, Evergrande said. The bank's shares [HKG:2066], whose trading was suspended today due to the reshuffle, closed at HKD7 (USD0.90) yesterday with a market capitalization of HKD61.6 billion (USD8 billion).

Evergrande had amassed debts of CNY2 trillion (USD257 billion) as of June 30, over 80 percent of its total assets, brought on by overaggressive expansion. The firm is under great pressure by regulators to reduce its debt burden as they rein in excessive borrowing in the real estate sector. It has already sold stakes in streaming platform Hengten Networks Group and real estate firm China Calxon Group and is in talks with investors to divest its flagship listed units China Evergrande New Energy Vehicle Group and Evergrande Property Services Group.

Editor: Kim Taylor