Developer GC PIK included in the SDN list of the US Treasury

The second residential developer in Russia in terms of current construction volume, PIK Group and the founder of the group, Sergei Gordeev, were subject to blocking US sanctions. The US Treasury explained the measures by the work of the PIK Group in the sector of the Russian economy, intended to support the military-industrial base. The sanctions may force PIK Group to restructure its equipment procurement schemes and will likely lead to a decrease in the group’s quotations on the Moscow Exchange, but should not create significant problems for the business, analysts say.

The structure of PIK Group, one of the main housing developers in Russia, PJSC PIK SZ and the founder of the group, Sergey Gordeev, are included in the SDN list of the US Treasury as part of the sanctions imposed against the Russian Federation on February 23. As stated in the materials of the US Treasury, the structure of the PIK Group of Companies is included in the list for its activities in the sector of the Russian economy intended to support the military-industrial base. The company has been issued a license from the US Treasury, allowing certain transactions, including those related to debt and equity, until April 8. PIK Group did not provide a comment as of Friday evening.

PIK Group told Kommersant that the group will continue to work as usual. “The company’s entire business is located in Russia, project financing is provided by Russian banks. Projects will be built and put into operation, and apartments will be transferred to buyers, as before,” says a representative of PIK Group. They added that the company is vertically integrated, and the technology platforms and solutions used are proprietary developments, which increases resistance to external factors and reduces risks.

In October 2023, it became known that Sergei Gordeev reduced his stake in PIK Group from 52.49% to 32.49%. Then 20% of the shares were received by the closed mutual fund “Institutional Investments in Residential Real Estate Fund No. 1” under the management of Central Trust Company JSC. Other shareholders of PIK Group are unknown. In the fall of 2022, Sergei Gordeev left the post of CEO of the group. RBC sources said that the businessman will head the board of directors of PIK Group.

Managing partner of Meta Group, Maxim Leshchev, believes that inclusion in the SDN list will not affect home buyers and is unlikely to lead to serious disruptions in the activities of PIK Group. Although the developer, according to him, will be forced to rebuild some of its processes, in particular contracts relating to the supply of equipment.

On the other hand, the expert adds, falling under US sanctions along with the status of one of the key developers may in the future become an additional argument for state support.

Timur Ryvkin, director of the residential real estate and land development department at Nikoliers, does not see any significant risks for PIK Group. The developer’s business was initially largely localized, and in the last two years additional work has been carried out in this direction, he points out. Mr. Ryvkin admits that sanctions against Sergei Gordeev himself will affect his own projects abroad, but only on the condition that he is directly the founder. General Director of the Investment Technologies company Dmitry Kotrovsky also points out that sanctions may limit PIK Group in the development of projects outside of Russia.

Kommersant’s interlocutor in investment circles notes that the quotations of PIK Group on the Moscow Exchange on Monday will most likely react to the news of inclusion in the SDN list with a decrease. But this will be an emotional reaction, since no significant problems are expected for the developer in this regard, he points out. At the close of trading on February 22, shares of PIK Group on the Moscow Exchange cost 835.5 rubles. per security, which is 1.8% more expensive than the day before, the group’s capitalization amounted to 551.84 billion rubles.

Before PIK Group, among the notable players in the real estate market, the Kyiv Ploshchad group and one of its founders, God Nisanov, were subject to US sanctions. The group’s portfolio includes 3.9 million sq. m of commercial real estate mainly in Moscow, including Food City, Velozavodsky market, the reconstruction project of the Olimpiysky sports complex, the Evropeysky shopping center, Depot, etc.

Alexandra Mertsalova, Anatoly Kostyrev