Page 168 - RusRPTMay21

Right Offerings to existing shareholders, followed by a Rump Offering (ABB). The price of the offering is set $1.7/GDR (as of the close on 16 April). Sistema PJSFC (the largest investor with a 25.6% share) is expected to participate pro-rata in the right offering as well as in the rump offering, including those unsold to other investors via ABB
· SPO proceeds are planned to be used to fund land bank replenishment and on the acquisition of new projects in 2021 of 3.5mn sqm NSA
· On portfolio replenishment, management said 1mn sqm was targeted in 2021 and 3.5mn sqm was under negotiation in total, which will be partially funded by SPO proceeds. More details will be disclosed in the SPO memorandum on 26 April. In general, the plans are mostly in-line with the Strategy disclosed at the CMD in November 2020 – new projects will be diversified between Moscow and St Petersburg – 21% and 79%, respectively – with 10%+/year sales growth in sqm beyond 2021, which management flags as conservative.
Etalon’s new contract sales fell 22% y/y in volume terms and 10% y/y in value terms in 1Q21, while average prices rose 15% y/y.
According to the company, its LfL price growth was 8% q/q for apartments, 3% q/q for parking lots and 4% q/q for the mix. The share of mortgages slightly retreated q/q to 63% for apartments and 37% overall. Lower sales volumes were seen in both Moscow and St. Petersburg in 1Q21, with the latter underperforming the former (-30% y/y in St. Petersburg vs. -13% y/y in Moscow).
The company also provided details on its share offering. The offering will consist of a rights offering to existing shareholders and a marketed offering to institutional investors. The rights offering will take place on Monday, 26 April, and the marketed offering will be conducted via an accelerated bookbuild (ABB). The placement price is set at $1.7/GDR. Etalon will offer up to 88,487,391 shares, i.e. up to 30% of Etalon’s shares, which is in line with previous announcements. Sistema is expected to participate in the rights offering on a pro-rata basis, as well as to place an order for further GDRs in the marketed offering, covering any unsold shares to other investors following the ABB.
During the conference call, management reiterated that the company’s decision to raise equity capital is linked to its plans to expand its land bank. Having analyzed 6mn square meters of land plots, Etalon plans to acquire up to 1mn square meters in 2021 worth up to RUB30bn. All new projects should ensure a target gross margin of 35%. The company will disclose more details about its new projects in an investment memorandum that it will publish on Monday.
168 RUSSIA Country Report May 2021 www.intellinews.com