(Yicai Global) May 11 -- RiseSun Real Estate Development, the No. 23 in the top 100 Chinese property developers, intends to spin out its subsidiary Rongwanjia Life Services and take it public on the Hong Kong Stock Exchange to advance its property management business.

Rongwanjia would offer not more than 25 percent of its outstanding equity in the public offering that would include international placing, the Hebei province-based parent said in a statement yesterday, without disclosing the intended scale of fundraising nor the schedule for listing. The issuance would involve a greenshoe option that goes up to 15 percent of the shares.

Founded in 1996, RiseSun was ranked No. 23 in CRIC Research Center's list of Chinese real estate firms last year.

Amid slowing property development business, many Chinese mainland firms, including Country Garden Holdings and China Poly Group, have spun out their property service subsidiaries to achieve new IPOs in Hong Kong. Last month, Shimao Property Holdings said it will follow suit.

The proceeds would be used to develop Rongwanjia's business, possibly via mergers and acquisitions regarding community life services, as well as to replenish its working capital, said the parent that currently holds over 91 percent of the target firm's equity. That means that it would remain the largest shareholder after the listing.

In the first quarter, Rongwanjia posted CNY50.4 million (USD7.1 million) in net profit and CNY404.8 million in revenue (USD57.2 million), the statement added, without disclosing whether that was more or less from a year ago. The firm's 2019 net profit was CNY101 million and revenue CNY1.3 billion (USD183.5 million).

RiseSun’s share price [SHE:002146] rose 0.7 percent to CNY8.13 (USD1.15) this afternoon.

Editor: Emmi Laine