Etalon Managers Want to Buy Stake from Owner

The management of Etalon Group, one of Russia’s largest residential real estate developers, is looking at buying a stake from the company’s founder Vyacheslav Zarenkov, the company told Reuters on Wednesday.

Sources familiar with the talks had told the news agency that its managers wanted to buy part of the 30.7 percent stake that the Zarenkov family controls.

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

Etalon Group is one of Russia’s oldest listed homebuilders. In 2011, it raised $575 million via an initial public offering (IPO) 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 the company’s current market capitalization, the stake held by Zarenkov’s family is worth $243 million.

“(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 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.”

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.