(Yicai Global) Nov. 23 -- The lucrative property management business of China Evergrande Group looks set to raise as much as HKD15.8 billion (USD2 billion) when it goes public in Hong Kong next week, bringing much needed funds to China’s largest and most indebted property developer.

Evergrande Property Services Group is offering 1.62 billion shares priced at between HKD8.50 and HKD9.75 (USD1.10 and USD1.26) each, the spin-off company said yesterday. The stock is expected to start trading on Dec. 2.

Twenty-three cornerstone investors have already subscribed for almost half of the company’s shares, Executive Director and General Manager Hu Liang said, without going into further details.

The initial public offering comes at a time when Chinese developers are under great pressure from regulators to reduce their debt levels. The real estate market remains depressed post-Covid-19 and as of July the Shenzhen-based firm had achieved less than half of its CNY800 billion (USD114 billion) sales target for this year. Evergrande has more than 200 commercial properties up for sale.

But the property management sector has been going from strength to strength. Net profit at Evergrande Property, which manages over 1,400 projects in more than 280 cities worldwide, nearly tripled in the first half from a year ago to CNY1.1 billion (USD167.6 billion) on operating revenue of CNY4.6 billion.

Last year, revenue at the property services arm of Guangdong-based developer Country Garden doubled and it was the first company to reach a market cap of more than HKD100 billion on the Hong Kong bourse. As a result, a slew of developers have recently announced plans to spin off their services arms for separate listings.

Evergrande Property sold a 28 percent stake in August to 14 investors for HKD23.5 billion (USD3 billion), among them affiliates of internet giant Tencent Holdings, private equity firms Yunfeng Capital and Sequoia Capital and lenders Agricultural Bank of China and China Everbright Bank.

Evergrande Property will continue to expand after going public, Hu said. Around 65 percent of the funds raised will be used for acquisitions. The firm took over three regional property management companies in the third quarter, he added.

Shares of parent China Evergrande [HKG: 3333] closed 2 percent lower today at HKD16.28 (USD2.10) apiece, after gaining as much as 4.8 percent in early trading. The company has a market value of HKD217 billion (USD28 billion).

Editors: Dou Shicong, Kim Taylor