· Companies owned by Sergei Gordeev have reached an agreement to buy out the stakes belonging to companies owned by Mikail Shishkhanov and Alexander Mamut, thereby consolidating a controlling stake in PIK
· Sergei Gordeev will make a mandatory tender offer to purchase the shares of minority shareholders, following receipt of approval from the Federal Antimonopoly Service (FAS)
· VTB, acting as a portfolio investor, will acquire a 7.6% stake in the Company
· The controlling shareholder confirms his commitment to preserve PIK’s status as a public Company and considers this consolidation as an important step in the Company’s further development
· Shareholders and management will prioritise: increasing the liquidity of PIK’s shares, including through a planned SPO in the medium term; making regular dividend payments; and lowering debt financing costs
Moscow, 5 July 2017 – PIK Group ("PIK" or the "Company") (MOEX: PIKK), Russia’s largest residential real estate developer, announces changes to its shareholder structure and confirms its commitment to maintaining a presence on the capital markets and to developing further as a public company.
Entities controlled by the main shareholder, President and Chairman of the Management Board of PIK Sergei Gordeev, have reached an agreement to buy out the shares of the Company belonging to entities owned by Alexander Mamut and Mikail Shishkhanov. Following the closing of the deal and completion of all mandatory procedures, Sergei Gordeev will become the controlling shareholder with a 50.02% stake in PIK. For the purposes of the transactions, the purchase price of one ordinary share was set at RUB 280.00. VTB Capital acted as the arranger for the transaction.
PIK’s Board of Directors and management welcome the development, which simplifies the Company’s ownership structure and underscores the controlling shareholder’s confidence in the considerable long-term potential of the business. The transaction was carried out on market terms, and allows the controlling shareholder, as President and Chairman of the Management Board, to more effectively implement PIK’s strategy as a public company.
In accordance with current legislation, Sergei Gordeev intends to make a mandatory tender offer to the Company’s minority shareholders. This offer will be sent to PIK’s Board of Directors for consideration within 35 days from settlement of the transactions to acquire the stakes owned by Alexander Mamut and Mikail Shishkhanov. The offer will be at a premium to the price established in the main transaction. The actual price will correspond to the weighted average value of the Company’s ordinary shares over the six months of trading on Moscow Exchange preceding the mandatory tender offer (as of today this would be about RUB 290.00).
Sergei Gordeev has obtained an approval to consolidate 100% of PIK’s shares from the FAS. This approval was necessary to consolidate a controlling stake and to conduct a mandatory tender offer. This is a technical step and does not indicate any change in the Company’s capital markets strategy.
At the same time, PIK announces that it has sold to VTB Group quasi-treasury stock representing a 7.6% stake in the Company’s share capital. The stock was accumulated in the course of the voluntary tender offer made as part of PIK’s delisting from the London Stock Exchange.
It is expected that the transactions through which Mr Gordeev’s entities will consolidate a controlling stake in PIK will close at the beginning of the third quarter of 2017.
Through the implementation of its new capital markets strategy, the Company successfully consolidated trading of its free float on Moscow Exchange. In addition, thanks to a number of additional corporate actions, PIK has increased the liquidity of its shares more than fourfold compared to the average trading volumes in 2016. Further increasing the liquidity of shares remains one of the priorities of the new strategy. The Company confirms its plans to conduct a Secondary Public Offering of shares (SPO) in the medium term. VTB Capital has been mandated as the lead underwriter on this transaction.
In line with previously announced plans, PIK’s Board of Directors on 22 June 2017 approved a new dividend policy that envisions payments of no less than 30% of net cash from operating activities (OCF) twice annually. This policy reflects international best practice and enables fair and sustainable cash payments to shareholders.
The Company is actively working to further optimise financing costs through its continuous presence in the debt capital markets. On 28 April 2017, PIK placed a ruble bond issue worth RUB 10 billion with the Company’s lowest ever coupon rate. In addition, the proceeds from the sale of shares to VTB Group will be used to expedite repayment of the Company's more expensive debt.
The main shareholder and management of the Company believe that the price of PIK shares today does not fully reflect their fundamental value, given the scale and depth of the transformation that has taken place. PIK continues to work actively to develop strong relationships with the investment and financial community.
At the same time, PIK remains highly focused on achieving its operational and financial goals, as well as increasing market share in key segments and regions where the Company operates.
Sergei Gordeev, President and Chairman of the Management Board of PIK, said:
“PIK has successfully become the leader of residential real estate development in Russia by all key metrics. I am very confident that the investment community will fully appreciate these results, and we will be able to replicate this same success in the capital markets. PIK shares are already demonstrating positive dynamics, and the Company is well positioned to reach its fair value in the foreseeable future.
“I believe in the potential for growth of our business and the prospects for transforming PIK into the technological leader of our industry. No less importantly, I fully believe in PIK’s future as a public company, and that a wide range of investors from Russia and abroad can be a part of this success story.
“We are fully focused on creating shareholder value, developing a strong system of corporate governance, increasing the liquidity of our shares, ensuring regular and fair dividend payments, and also on supporting open and transparent relations with our investors. We have a clear and pragmatic strategy for achieving these objectives and a unique and enthusiastic management team that will continue to work towards executing our plans.”
Remaining a public company
PIK confirms its commitment to its strategy to develop as a public company and to continue to adhere to best practice standards of corporate governance and information disclosure. In particular:
· The Company will preserve its existing governance structure, including a Board of Directors with independent directors. The Board of Directors will continue to determine PIK’s long-term strategic objectives and monitor the progress of the management team, led by President and Chairman of the Management Board Sergei Gordeev.
· PIK intends to focus on developing robust relations with shareholders and the international investment community.
· The Company will continue to publish results and report on its activities in the form of quarterly operating results and financial results every six months.
About PIK Group
PIK Group was founded in 1994 and today is the leading residential real estate developer in the Moscow Metropolitan Area and in Russia as a whole. The Company is present in nine regions of Russia with an extensive project pipeline focused on the lucrative Moscow Metropolitan Area. The Company has a proven track record with about 16 million sqm of residential real estate built since inception (0.9 million sqm in 2016).
PIK shares have been listed on Moscow Exchange since 2007. PIK Group has a strong reputation on the market and continues to demonstrate robust financial and operating results:
· Record growth by all indicators in 2016: total cash collections grew by 47% year-on-year, new sales contracts to customers advanced by 52% year-on-year, 63 new properties were put on sale against 50 in 2015;
· The share of mortgage-backed deals has grown sevenfold over the last seven years thanks to a disciplined and customer-centric approach;
· Comfortable leverage profile without exposure to currency risks which creates room for further sustainable growth.
In 2017 the Company intends to maintain its market leadership on the affordable housing market, and expects total new sales to customers of 1.7-1.9 million sqm and total cash collections of RUB 190-200 billion.
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