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. Last Updated: 07/27/2016

PIK Seeking $2.2Bln In Top Industry IPO

PIK Group aims to raise up to $2.2 billion in a share offering in London and Moscow to become Russia's top property developer with a market value of over $14 billion, the firm said in a statement Friday.

PIK, one of the leaders of the booming property development market in Russia's capital, which has a population of over 15 million, said it had set the indicative price range for its initial public offering at $25.00 to $31.00 per share.

The IPO will therefore raise $1.8 billion to $2.2 billion, and even if priced at the bottom of the range it would give a value of $11.4 billion, and easily outpace the previous record IPO by AFI Development, a Russia-focused real estate company.

AFI raised $1.4 billion in a London IPO earlier this month, for a value of $7.3 billion, which many analysts said was surprisingly big, even considering AFI's ambitious projects in Moscow and the surrounding region.

Rustam Botashev from Aton brokerage said Russian and foreign investors still had a strong appetite for Russia's real estate sector, but warned against excess optimism.

"We believe investors should become more conservative in their bidding, after AFI's IPO," he said, noting that AFI's shares have fallen 12 percent since the IPO.

PIK's IPO will dwarf previous placements by other Russian construction and real estate firms Open Investments and Sistema-Hals. Unlike AFI, PIK is mainly targeting the middle-income housing market.

"We believe that our 12-year track record, our dedicated focus on the growing mass market residential sector underpinned by expansion dynamics of the Russian economy, and our experience and capacity to deliver, offer a unique and attractive proposition to investors," PIK's chief executive Kirill Pisarev said in a statement.

PIK's revenues rose 90 percent in 2006 to $1.55 billion and its earnings before interest, tax, depreciation and amortization were $486 million. Net profit soared to $298 million from $20 million in 2005. The company has 14,000 employees.

PIK, which has Deutsche Bank, Morgan Stanley and Nomura acting as coordinators and bookrunners and Merrill Lynch as joint lead manager, said the value range of $11.4 billion to $14.1 billion excluded any primary proceeds raised as part of the IPO.

Dozens of Russian firms have announced plans to list in Russia and abroad against a background of booming markets and an explosion in corporate finance, debt and equity deals.

Many analysts say Russian firms are rushing to have IPOs to cash out before the presidential election in March 2008.

One of PIK's focuses is production and assembly of concrete panel housing in Moscow as a subcontractor for the Moscow city government. Mayor Yury Luzhkov is due to step down in December after 15 years in office.