PIK Group, the Russian residential property developer pursuing listings in London and Moscow, has got its stock away — but only just.
Pricing at $25 a share — the bottom of its previously indicated $25-$31 range — the firm, which specialises in low-cost pre-fabricated homes, has raised $1.8bn. But according to Russia’s Kommersant business daily, $1bn of that came from just two large but unnamed Asian investors, who agreed to rescue the float at the last minute.
This may have something to do with the performance of AFI Development, another Russian real estate firm which listed last month and raised $1.4bn in the process. Since then the stock has fallen 20 per cent.
Meanwhile, the Russia Blog picks up a small news item published by Russia’s Finance magazine this week, citing its meaningful title: “The IPO has evolved into a rather sound way to cash out.”
“The author,” Russia Blog says, “thinks that way back in 2003-2005, Russian assets were priced rather cheap compared to other emerging markets. At that time, the owners of major Russian businesses were reluctant to sell off their companies to investors. But by 2006, Russia’s most successful businessmen understood that the market was ready to pay more, and that these prices could often exceed their expectations. Thus, IPOs surfaced as the best way to “cash out”.
“The article cites the PIK construction company as an example. The owners valued the company at $1 billion at the end of 2005, and now Deutsche Bank, Morgan Stanley and Nomura International believe that it is worth $11-14 billion.”