--ADDS BROKER COMMENTS--
It mirrors the move made by Greka Drilling, which demerged from Chinese gas specialist Green Dragon in 2011.
The float sees Green Dragon shareholders receive all of Greka Engineering’s shares in a special “demerger dividend”.
Greka Engineering provides engineering, procurement, construction and management services for infrastructure projects in China, which the company believes is at the start of an unconventional gas revolution.
Executive chairman Randeep Grewal said: “Following the successful demerger of Greka Drilling in 2011, it has become increasingly clear that a similar opportunity existed for Green Dragon to demerge Greka Engineering - allowing Greka Engineering to take full advantage of the exciting opportunities offered by the rapidly growing unconventional gas market.
“In addition, this dividend provides Green Dragon's shareholders with an opportunity to continue to grow with this niche business or monetise their investment, at their discretion.”
Mining house RFC Ambrian has started covering the stock and thinks the company will benefit from increased production at Green Dragon.
Analyst Stuart Amor said: “We believe that GDG is about to see its coal bed methane (CBM) production take off and that GET’s midstream business should be a major beneficiary of this.”
He also believes the demerger will allow Greka Engineering to expand its client base, which already includes Petrochina and Sinpoec.
Amor is forecasting revenues of US$5.4mln this year, just below last year’s mark, but is tipping them to rise to US$8.3mln the year after.
The analyst, who has a fair value for the share price of between 3.8p and 6p, expects the company to turn a profit in 2015.