BEIJING - Greentown China Holdings Ltd, a Hangzhou-based property developer, is talking with a subsidiary of China Investment Corp (CIC), Blackstone Group and Beijing Greentown Sunshine Investment Co to set up a joint venture (JV) for domestic property development.

"With a 60 percent stake, China Jianyin Investment Securities Co is to launch the JV, and the Blackstone Group will take a 10 percent stake in the JV via its private-equity team," said a source with knowledge of the deal on Monday.

Jianyin Investment Securities is a wholly-owned subsidiary of CIC, China's sovereign wealth fund, which is headquartered in Beijing. Established in September 2004, Jianyin has registered capital of 20.6 billion yuan ($3.24 billion),

It focuses on investments in China, including asset management and disposal, investment management, real estate and consulting.

According to publicly available information, this deal would be the first time that CIC has made a domestic property investment through its subsidiaries.

In June, Greentown said in a statement that it was working with Beijing Greentown Sunshine Investment Co and two other partners to set up a JV.

Greentown said that it would take a 24 percent stake, Beijing Greentown Sunshine Investment Co would hold a 6 percent stake and the other two partners would have stakes of 60 percent and 10 percent.

The registered capital of the JV is 2 billion yuan. All the parties involved will contribute 20 percent initially, with the remaining 80 percent to be contributed within two years after the JV is set up.

"CIC Chairman Lou Jiwei took part in the negotiations and finally agreed on the deal between Jianyin and Greentown.

"Jianyin is only responsible for financing and project implementation," New Century Weekly quoted an unidentified source close to the CIC as saying.

But according to the source, the registered capital might increase to 6 billion yuan, with 3.6 billion yuan coming from Jianyin.

"The JV will be a platform for property investment and financing, targeting infrastructure construction, urban development and real estate development," Luo Zhaoming, deputy chairman of Greentown China, was cited by New Century Weekly as saying.

According to Luo, the JV hasn't been registered yet since it is still waiting for approval from relevant ministries as it involves a foreign institution.

A decision is expected to be announced at the end of this year or in early 2012.

"The establishment of the company can't quench Greentown China Holdings' capital thirst," said Grant Ji, director of the investment department of the real estate service provider Savills Property Services (Beijing) Co Ltd.

Greentown China, which has a high debt ratio, is considering selling some projects to improve its cash flow.

Stephen Ip, infrastructure and real estate industry lead partner for KPMG China, said that developers have found refinancing increasingly difficult, and conditions could worsen if the tightening measures persist.

"Some property developers are facing a real risk of bankruptcy in the coming months," said Ip.