Share-sale bankers struggling in Hong Kong's quiet fundraising markets have one company to thank for a recent increase in activity that might continue: China Petrochemical Corp., also known as Sinopec Group. But a pending initial public offering by a Sinopec unit that could raise up to $2.7 billion isn't a done deal.

China's largest oil refiner, fresh from tapping Hong Kong's markets for almost $7 billion in funding via a listed unit, is trying to raise more funds by listing its construction arm, Sinopec Engineering (Group) Co., in Hong Kong. The deal is set to be the city's biggest initial public offering so far this year and could spark more IPOs, although some fund managers said they are skeptical about the deal.

Sinopec Engineering is still gauging investors' interest in the IPO, but some fund managers said bankers are asking for too much.

"It's not a sexy business, but it is stable," said William Lo, portfolio manager at Ample Capital Ltd., adding that his fund won't invest in the IPO. "Bankers are looking to price the deal quite high."

Sinopec Engineering aims to price its IPO at between 10 times and 15 times estimated 2013 earnings, compared with the 10 to 11 times that the benchmark Hang Seng Index is trading at, Mr. Lo said. Sinopec Engineering's smaller rival Wison Engineering Services Co., 2236.HK +0.79%which raised $239 million from a Hong Kong IPO in December, trades at about 12 times its estimated 2013 profit.

The planned IPO is the largest in Hong Kong since People's Insurance Co. (Group) of China Ltd. raised $3.6 billion in November, and could help reverse the city's fortunes. Once the source of the world's biggest IPOs globally, Hong Kong fell to the fourth spot last year and isn't among the top five so far this year. Sinopec Engineering plans to start taking orders in a roadshow of presentations to investors beginning May 6.

Beijing-based Sinopec Engineering aims to list on the Hong Kong bourse on May 23. Proceeds from the IPO will partly go toward securing more overseas engineering and construction projects. The company has operations in the Middle East, Central Asia, the Asian-Pacific region and North America, but China projects account for 83% of revenue.

Sinopec Engineering is dependent on its parent, Sinopec Group, for revenue, but there are signs that it is trying to become independent, J.P. Morgan Chase JPM +1.14%& Co., one of the underwriters for the IPO, said in a report.

Last year, Sinopec Engineering derived half of its revenue from Sinopec Group, down from 66% in in 2010, J.P. Morgan said. Although strong links to its parent may mean stable sales, analysts said that limits growth opportunities.

However, "Sinopec Engineering's increasing penetration in overseas markets should emerge as a new source of growth in coming years," J.P. Morgan said.

Sinopec Engineering is looking to raise between $2.1 billion and $2.7 billion by selling 1.328 billion shares, or 30% of its enlarged share capital. The company is in talks to sell 30% to 40% of the offering to cornerstone investors, people familiar with the situation said earlier.

Analysts said they expect Sinopec Group's Hong Kong- and Shanghai-listed unit China Petroleum & Chemical Corp., 600028.SH -0.60%which is known as Sinopec Corp., to continue to tap Hong Kong's capital markets for cash, after its parent said last year it would ultimately sell all its upstream oil and gas assets to the unit.

The asset sale started last month, when Sinopec Group agreed to sell $1.5 billion of its approximately $40 billion worth of overseas oil and gas assets to Sinopec Corp. The asset sale came weeks after Sinopec Corp. raised US$3.1 billion in February through a private placement of Hong Kong-listed shares, Asia's largest placement this year.

Last week, Sinopec Corp. issued a $3.5 billion U.S. dollar bond—the largest dollar-denominated bond out of Asia excluding Japan in a decade—to fund its parent's asset-injection plan and overseas expansion.

"We believe [Sinopec Corp.'s] ultimate goal is to prime equity markets to absorb an even larger capital raising to buy upstream parent company assets," Jefferies analyst Laban Yu said in a note.