Private property groups in Russia with assets of up to $50bn are drawing up plans to float within the next year, according to bankers and brokers.
The listings would be in Moscow but most would also seek a dual listing in London through the issuance of global depositary receipts (GDRs).
It is understood that at least eight have had pre-initial public offering valuations carried out by agencies such as Jones Lang LaSalle (JLL) and Cushman & Wakefield.
The moves come amid a strong property market in Russia with both rents and capital values rising on the back of the country’s economic growth.
Until a year ago there was only one Russian-focused property company listed in London: Raven Russia. Five others have since joined it, defying the traditional caution about the opacity of the Russian market and wider political uncertainty.
“There are a lot of Russian groups who have been considering IPOs as a way to bring equity into their businesses,” said Mark Jagger, head of JLL’s Moscow office.
“They are building up portfolios, establishing their credibility as developers and preparing for flotation.”
Companies considering a listing include Don-Stroi, Stroyinkom-K, ST Group Region, DVI Group, LenSpetsSmu Holding and RosEvroDevelopment. Others may include Capital Group, Mirax, Storm Properties and Promsyvaz ‘Nedvizhimost’. Open Investments, already listed in Moscow, said last month it “may consider” a London listing.
“Everyone is thinking about it, it’s just a question of timing,” says Konstantin Sakharov, head of retail at Cushman’s Moscow office.
Recent London floats were Sistema Hals, PIK, Mirland, RGI and AFI, with a combined market capitalisation of more than $20bn.
The Russian groups have mostly outperformed UK property stocks although one, AFI, has seen its share price plunge since its April IPO – which was priced at a premium of 70 per cent to net asset value.
Alexander Khaldey, who runs the group, said stock market conditions had worsened: “It [flotation] would be suicidal right now.”
Felix Evtushenkov, president of Sistema Hals, said many of the floats would fail. “Some of these companies are not ready for open book-keeping, the rules and regulations,” he said.
“And conditions have become harder in terms of leverage.”
Yet some executives argue that the relatively low gearing of Russian property companies and the underlying strength of the market could make them attractive to foreign investors.
“It was always seen that emerging markets were the riskiest and the developed markets were the most safe,” said Kirill Pisarev, president of PIK.
“But because of such debt and leverage in those countries their risk profile has really changed. In emerging markets such as Russia there is very little debt.”
Values and rents are rising in both residential and commercial real estate.
