Russian developer eyes US$2.2b in stock offer

PUBLISHED : Saturday, 19 May, 2007, 12:00am
UPDATED : Saturday, 19 May, 2007, 12:00am

PIK Group, a Russian flatbuilder, plans to raise as much as US$2.2 billion in an initial public share sale and use the cash to respond to soaring housing demand.

The offering of new and existing shares to be listed in London and Moscow in a price range of US$25 to US$31 a share would value the company as much as US$14.1 billion, PIK said yesterday.

That would make it Russia's biggest property firm by market capitalisation.

Russian developers have raised about US$4 billion via share sales in the past six months as a nine-year economic boom drives demand for modern offices and housing.

The initial public offering may be Europe's second largest by a property company after Vector Hospitality, a British hotel real estate investment trust, yesterday said it planned to raise as much as #2.5 billion (HK$38.56 billion).

Prices for apartments have doubled in Russia's largest cities over the past two years as wages grew about 60 per cent, encouraging a growing middle class to buy larger homes.

The national housing deficit stands at 1.6 billion square metres, according to the Industry and Energy Ministry.

AFI Development, the Russian property company controlled by Israeli billionaire Lev Leviev, this month raised US$1.4 billion in the biggest public offering by a developer in Europe.

PIK hired Morgan Stanley, Deutsche Bank and Nomura International to manage the sale.

PIK was building two million square metres of housing and offices around Moscow and six million square metres in the southern region of Rostov-on-Don, business daily Vedomosti reported.


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