SINGAPORE (Oct 9): Shares of Raffles Education Corp soared in early trade today after the company said it would spin off its wholly owned Oriental University City Holdings on Hong Kong’s Growth Enterprise Market.

The stock move to a four-week high of 35 cents, up 7.7%, at 9:50am (0150 GMT).

Immediate resistance for the share price is seen at 37.5 cents (Aug 22 high).

The Mainboard-listed private education provider said in a regulatory filing yesterday that proceeds from the listing of its Hong Kong-based unit will be deployed into the group’s core trade and other strategic businesses.

Raffles Education has submitted a draft prospectus to the Stock Exchange of Hong Kong, but details of the IPO, including when shares of Oriental University will start trading, have yet to be finalised.

The additional funds will come in handy for Raffles Education, which said last month that it would spend about $40 million to buy some real estate in Switzerland to set up a hospitality management school and use it to expand in Europe.

It said the move into Europe is in line with its efforts to develop three related businesses to drive long-term growth.

These involve providing private education, managing education assets and facilities, and investing and developing education-related real estate.

If all goes as planned, the new strategy should bode well for Raffles Education’s bottom line and raise its profile in the eyes of investors.

The company has been struggling to grow amid dwindling student enrolment in its schools in China, its biggest market.

While it has been able to shore up its bottom line and balance sheet in recent quarters, earnings have mostly been driven by one-off asset sales.

As at March 31, it had $103.7 million in cash on its balance sheet.