China Evergrande Group raised roughly HK$10.6 billion ($1.4 billion) through the sale of shares in its electric vehicle unit, the debt-laden developer disclosed Thursday in a bourse filing.

China Evergrande New Energy Vehicle Group Ltd. sold 260 million shares for a 20% discount at HK$40.92 each, the parent company revealed, leading the value of the electric vehicle unit to tumble in morning trading on the Hong Kong Stock Exchange.

The sale, which amounts to approximately 2.7% of outstanding shares in Evergrande NEV, is part of a larger attempt by the real estate group to right its balance sheet after coming under fire last year from Chinese regulators.

And as the transaction will slash the ratio of top shareholders to under 90%, the electric vehicle company will be eligible to participate in the HKEX's Stock Connect program which will allow mainland investors to buy shares in the Hong Kong-listed company.

Shares of Evergrande NEV were trading as much as 15% lower Thursday morning after the announcement, while the parent company saw a 0.9% dip.

Evergrande said it will use the proceeds from the sale as general working capital, which is in line with the developer's commitment announced in March to halve the remainder of its debt in the coming two years.

Haitong International Securities, CMB International Securities and Huatai Financial Holdings served as placing agents in the deal.

The developer recently reported a drop in profits for the second year in a row, but it's a different story for its electric vehicle unit.

Evergrande NEV is riding a wave of interest in alternative energy transportation among investors. The company's shares have risen more than 600% since 2020, despite an empty product pipeline that amounts to little more than a few test drives and show models.

In January, Evergrande NEV completed a $3.4 billion capital raise that gives the company a larger market cap than Ford Motors Co., according to Bloomberg.