(Yicai) Nov. 18 -- Shares of Joy City Property advanced after the Chinese commercial real estate developer said it will delist from the Hong Kong Stock Exchange.

Joy City [HKG: 0207] closed 3.3 percent higher at 62 Hong Kong cents (8 US cents) a share today. The stock has soared 158 percent since the start of July.

After 12 years of trading on the stock exchange, Joy City will delist on Nov. 27, the Hong Kong-based firm announced yesterday, citing a court meeting the same day at which shareholders approved the proposal.

Joy City’s thin trading volume and a listing that no longer serves as an effective channel for raising funds, combined with a more unwieldy governance structure, pushed the company toward privatization, according to China Real Estate Information Corporation, a property information and consulting services provider. Going private also gives investors an exit path, CRIC said.

Given the multi-year slump in real estate sales and the complex and volatile market environment, privatization has become an inevitable outcome of the industry’s restructuring, CRIC noted.

The wave of property developers quitting the stock market is likely to persist over the next two to three years as the sector undergoes a deeper shakeout, according to industry insiders.

Joy City is a subsidiary of Chinese state-owned food processing giant Cofco Group. It owned or managed 32 Joy City shopping malls, Joy Hub hotels, and other commercial projects in China as of the end of last year.

Real estate developer Grandjoy Holdings Group, another Cofco unit, is Joy City’s largest shareholder with a 64.2 percent stake. It announced at the end of July that Joy City would spend about HKD2.9 billion (USD373 million) in a share buyback scheme.

Once the privatization is completed, Grandjoy’s stake in Joy City Property will jump to 96.1 percent. The remaining 3.9 percent will be held by Demao, which now owns 2.6 percent.

After the deal is closed, Grandjoy will increase its equity in Joy City, boosting the net profit attributable to the parent company, Grandjoy noted.

Editor: Futura Costaglione