(Bloomberg) -- China’s cash-strapped property developers are set for the first major test of investor demand after policy makers lifted restrictions on local share sales. 

Luxury builder Shimao Group Holdings Ltd. plans to sell as much as 30% of share capital of its key China-listed unit to no more than 35 investors. Smaller regional company Hubei Fuxing Science and Technology Co. also plans a private share sale. 

The two developers will provide the first gauge of demand from investors at a time when real estate shares are just starting to rebound from record lows. China said this week that it would end a ban and allow listed builders to sell local shares for debt repayment and acquisitions. 

Shimao’s key unit onshore, Shanghai Shimao Co., could raise more than 3 billion yuan ($420 million) based on its current market value, which would meaningfully boost its cash pool that stood at 4.5 billion yuan as of September-end, Bloomberg Intelligence analysts Daniel Fan and Adrian Sim said in a note.  

The company “will be able to come up with a debt plan,” if using part of the proceeds as a sweetener to negotiate a debt-extension, the analysts wrote. 

Shanghai Shimao said it will use the money for housing projects, debt repayment and working capital. 

Cash-strapped Shimao, which defaulted on two bonds this year, has seen its sales tank amid a cash crunch brought on by tightening policy measures. It’s requested a number of extensions in recent months to repay loans, asset-backed securities and trusts. 

It fell out of the top 10 by sales to 22nd, according to data from China Real Estate Information Corp. The company said last month it’s actively working on offshore debt restructuring. 

Shimao’s two yuan bonds both surged about 30% before being halted Wednesday morning. A 5.2% dollar bond due 2025 gained 1.6 cents on the dollar to 7.56 cents, set for the largest one-day rally in more than three months. 

Shares of Shanghai Shimao and Hubei Fuxing both surged by a 10% daily limit. 

China has eased its stance against developers after real estate prices fell the most in seven years in October, posting a 14th month of declines. The government has offered some developers the chance to issue guaranteed bonds and pledged to finance at least 1.28 trillion yuan for builders through its largest banks.

--With assistance from Phila Siu.

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