Wenzhou Kangning Hospital in Zhejiang province, China's largest private psychiatric healthcare group, is planning to raise additional capital of 193 million yuan ($29.5 million) through an initial public offering in the A-share market to fund its business expansion.

The Wenzhou-based company, which earned revenue of around 400 million yuan last year, is also listed on the Hong Kong Stock Exchange.

Following the IPO, it would be the first firm focusing on mental healthcare in the A-share market.

Mental health awareness has been increasing in China during the past few years due to improved living standards. Residents are spending more on mental health checks, prevention of mental problems, medication, treatment, and care, according to government data.

China had more than 16 million patients with serious psychiatric problems, and some 4.3 million patients with serious mental disorders by the end of 2015.

At the same time, the market for mental healthcare has been expanding and is expected to reach 65 billion yuan by 2019. The private sector is expected to account for 13.6 billion yuan, according to data from Beijing-based CIC Consultancy, a market research information provider.

Private mental healthcare hospitals are also raking in higher profits, according to a research note from Orient Securities Co Ltd.

Kangning Hospital's investment prospectus and disclosures said the hospital will spend 193 million yuan on relocating an existing hospital in Cangnan county, building a new hospital in Pingyang county, and establishing a training center in Wenzhou. All of the three sites are in Zhejiang province.

According to Kangning's disclosure, gross profit margin of the group was above 38 percent since 2014. Its annual income was about 400 million, from offering treatment services in self-owned hospitals and other hospitals, drug distribution and other businesses.

Offering services to psychiatric healthcare departments in other hospitals and care centers will become one of the growth drivers for the hospital in the future, according to its filing.

The group has been involved in more than 30 disputes since its establishment, it said.

Analysts said that as demand for medical treatment and healthcare services for people with mental disorders is rising, high-end, privately-owned service providers are likely to grow rapidly in the next few years.

"High-end services are not encouraged in public hospitals and care centers as public resources are more focused on basic, essential and affordable services to enable greater access for more number of patients, which leaves more room for private hospitals to expand," according to a research note from Sinolink Securities.