Etalon to buy Russian business of developer YIT for 4.6 bln rubles
ST. PETERSBURG. April 1 (Interfax) - The board of directors of Russian real estate developer Etalon Group has decided to acquire the Russian business of Finnish construction company YIT, YIT Russia, Etalon reported.
The deal is worth 4.597 billion rubles.
Etalon Group together with YIT Corporation have agreed on the sale of YIT Russia. The completion of the transaction is subject to further regulatory approvals.
According to the agreement, Etalon Group will acquire YIT Russia, which focuses on mid-market residential real estate; its portfolio includes 19 projects in five different Russian regions: the Moscow metropolitan area, St Petersburg, the Ekaterinburg region, Kazan and Tyumen. YIT Russia's portfolio consists of residential real estate at the design stage or under construction. YIT's portfolio in Russia has a total unsold net sellable area (NSA) of 0.6 million square meters.
In addition, the transaction will include exclusive rights to Dispatcher 24 software for managing apartment buildings and residential areas, project design documentation and a library of standard design solutions for cast-in-place construction and buildings made of prefabricated panels, as well as service companies with 2.5 million square meters under management and a 50% stake in a joint venture with Brusnika, whose assets under management total 2.2 million square meters.
"The integration of YIT's business in Russia will enable Etalon Group to achieve several important goals, such as increasing the scale of the company's operations and strengthening our market position. Thanks to YIT's solid track record in regional markets, good reputation and experienced teams responsible for construction and sales, we can speed up our regional expansion by accelerating the pace of construction activities on our own projects in Ekaterinburg and Tyumen as well as by adding attractive new projects. The acquisition of YIT Russia will also enable us to enter Kazan, one of the country's most promising markets, thus expanding our geography of operations to seven regions. It will also increase our supply in our primary markets of Moscow and St Petersburg," Etalon Group CEO Gennadiy Shcherbina was cited as saying in the statement.
Earlier, on March 4, YIT announced that it was ceasing investments in land and the construction of residential properties in Russia.
"Due to the dramatic changes in geopolitical situation, our business is facing unprecedented challenges in Russia, and our highest priority now is to ensure the health and safety of our employees. In addition, we have sped up the strategic review of the Russian operations we initiated last November and expect to come to a conclusion on an accelerated schedule. At this point, we have active discussions ongoing with several parties," President and CEO of YIT Markku Moilanen was quoted as saying.
YIT's Housing Russia segment earned 204 million euros in revenue in 2021, accounting for 7% of overall revenue, according to the company.
YIT will also no longer buy building materials in Russia.
It was reported earlier that YIT was looking at the possibility of selling its Russian business.
YIT is the largest player on the residential construction market in the Northwestern Federal District and has been operating in Russian territory since 1961. The Russian division of YIT (YIT Russia) focuses on construction of middle-class residential real estate, like Etalon Group.
The group sold 446,480 square meters of real estate in 2021.
Etalon Group's main shareholder is Vladimir Yevtushenkov's AFK Sistema , which owns 29.8%. Alfa-Bank owns 16.7%, while management holds another 0.6% and the free float is 37.5%. Other shareholders include Mubadala Investment Company (6.3%), Kopernick Global Investors (5%) and Prosperity Capital (4.1%).