July 25, 2018 / 3:19 PM / 3 months ago

Managers of Russian builder Etalon want to buy stake from founder

MOSCOW (Reuters) - The management of Russian homebuilder Etalon is looking at buying a stake from the company’s founder Vyacheslav Zarenkov, the company told Reuters on Wednesday.

Etalon is one of Russia’s largest listed homebuilders and sources familiar with the talks had told Reuters that its managers wanted to buy part of the 30.7 percent stake that the Zarenkov family controls.

The company’s management currently owns a 2.6 percent stake while 61 percent is freely floated and the rest is owned by Baring Vostok Funds.

In 2011 Etalon raised over $500 million via an initial public offering in London. It is focused on middle class residential real estate in Moscow and St Petersburg, and its net profit for the last year was up 61 percent to 7.9 billion roubles ($125.30 million).

Based on Etalon’s current market capitalization, the stake held by Zarenkov’s family is worth $243 million, according to Reuters calculations.

“(Etalon) top executives would be interested in buying part of... Zarenkov’s stake. At the same time, a purchase of the entire Zarenkov stake is not up for discussion,” Etalon said in a statement in response to Reuters questions.

In the same statement, Zarenkov said he was aware of Etalon management’s interest in buying more shares in the company.

“I am ready to consider selling part of my stake to the management,” Zarenkov said, adding that no final decision had been made. “At the same time, I absolutely do not plan to sell out entirely.”

LIDER INTEREST

Russian real estate companies have been under pressure in recent years from weak demand on the back of Western sanctions and a fall in global oil prices that hit the Russian economy and overall consumer demand.

The government is also tightening rules for real estate developers after a number of them went bankrupt, leaving thousands of Russians with partly finished flats.

A new law forcing homebuilders to use bank loans to fund construction rather than relying on cash from selling homes before they are complete will add to costs and encourage industry consolidation, developers said this month.

The three sources said that earlier this year, the Zarenkov family was in talks with Lider Invest, a real estate firm controlled by Russian conglomerate Sistema, over a potential sale of the stake. However, those talks have not moved forward, one of the three sources said.

In the statement to Reuters, Etalon said there were no current talks with Sistema or Lider Invest.

A spokeswoman for Lider declined to comment specifically on Etalon but said that Lider Invest had an open credit line with Russia’s Sberbank for a potential acquisition of a real estate player or a stake in such a firm.

“We are looking and evaluating all the options which we receive but do not focus on a single (one),” she said in a written reply to Reuters questions.

Additional reporting by Anastasia Teterevleva; Writing by Katya Golubkova; editing by Emelia Sithole-Matarise

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