(Yicai Global) Jan. 9 -- Leading Chinese long-term rental service provider Danke Apartment will raise as much as USD175 million or more in its New York Stock Exchange initial public offering next week.

It will thus become the second US-listed Chinese long-term apartment brand after Q&K International Group, per Danke's updated prospectus which it issued yesterday.

Beijing-based Danke, which will land on the New York Stock Exchange on Jan. 17, plans to issue 10.6 million American Depositary Shares priced between USD14.5 to USD16.5 each, with underwriters granted the right to exercise a 'greenshoe' over-allotment option of 1.59 million ADSs. Funds raised in the IPO will be mostly used to purchase and renovate properties, enhance technical capacity and brand marketing and in prospective investments.

Danke filed its prospectus with the US Securities and Exchange Commission for the first time on Oct. 29, at which point the company had scaled-down expectations of raising up to USD100 million.

Danke's largest shareholder is now US hedge fund Tiger Management, which owns a 20 percent stake, and Chinese Fintech giant Ant Financial under Alibaba Group Holding, which is leading the IPO, with 7.8 percent. The company's three core executives Derek Shen, chairman, Chief Executive Gao Jing and President Cui Yan hold 6.3 percent, 14.2 percent and 2 percent, respectively.

Walking on Eggshells

Formed in 2015, Danke, whose name means 'eggshell' in Chinese, had 406,746 apartment units by the end of September and its business spanned 13 Chinese cities, with 52.6 percent of its housing resources located in the major markets of Beijing, Shanghai, Shenzhen and Hangzhou. The company reported CNY5 billion (USD722 million) in revenue in the first three quarters, up threefold from a year earlier.

Danke's rapid expansion has triggered massive losses as its long-term apartment development model devours colossal initial outlays. The firm burned through more than CNY4 billion in the past three years, with a net loss in last year's first three quarters of up to over threefold that of the year before to the tune of CNY2.5 billion.

Q&K International Group, which operates the Qingke Apartment brand, raised USD45.9 million in its US IPO last November. The company's shares [NASDAQ:QK] closed 8.45 percent higher at USD12.45 yesterday, but almost 27 percent lower than its offering price, giving it a USD91 million market cap.

Depositary receipts are negotiable securities issued by a depository bank abroad. DRs trade on the bank's domestic market, representing a specified number of shares investment in a local company's stock and trade in that country just as any other shares do. A depository bank is one that facilitates investment in securities.

A greenshoe is an over-allotment option in an initial public offering based on a clause in an underwriting agreement granting the underwriter the power to sell investors more shares than the issuer initially planned if demand outstrips expectations.

Editor: Ben Armour