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Kirill Pisarev
Education: Plekhanov Russian Academy of Economics
Learned about finance at the Russian Academy of Economics and in the early 1990s worked at First Russian Bank. Then founded First Mortgage Company (in Russian, PIK) with Yuri Zhukov, now also a billionaire. PIK Group was the first high-volume housing builder to go public in Russia, selling 15% of shares for $2 billion in June 2007. PIK's offering was the largest real-estate share-issue in Europe and led to increased valuations of Russian real estate across the sector.
Kirill Pisarev has become a multibillionaire by meeting Russia’s demand for mass-market blocks of flats. Now he is preparing to expand his empire overseas.
When you are young, Russian and a billionaire, you tend to get tagged as an oligarch – one of the elite, but unpopular, businessmen who wield a great deal of influence over Russia’s political and economic life.
Kirill Pisarev is only 38 years old and is one of 110 Russian billionaires listed by Forbes magazine. But he is no oligarch. His $6.7bn (£3.4bn) fortune was not amassed through buying national resources at a bargain basement price.
He is a property developer who, at the tender age of 25, realised there was a huge shortage of flats in Moscow.
PIK Group, the company he founded with friend Yury Zhukov in 1994, listed a year ago in Moscow and London in Europe’s biggest-ever property company flotation. With a market capitalisation of $15.9bn (£8.1bn) PIK is the largest listed developer in Russia and the world’s largest listed property company that is not a real estate investment trust.
Two weeks ago PIK unveiled a strong set of annual results for 2007. Its net profit was up 135% to $700m (£356m) on sales of $2.7bn (£1.37bn). CB Richard Ellis valued its portfolio at $12.3bn (£6.25bn) – a rise of 40% during the year.
And Kirill Pisarev and Zhukov have just started spending outside Russia. In January they invested £110m in a Hines office development at 78 Cannon Street in the City of London.
Pisarev’s path to fortune began in 1994. ‘It was a special time in Russia,’ he tells Property Week Global in his recently acquired English. ‘It was a time when if you wanted to do something, you could do it.’
But property was not on his radar when he began studying electronics at Russia’s State Finance Academy in 1989. After a two-year stint in the Russian army following his first year in education, he returned to study and shortly afterwards met Zhukov. ‘Yury had some business experience and had already tried to buy a flat,’ he says. ‘Now there is a shortage of flats, but back then there was a real shortage.’
While Kirill Pisarev believes destiny played a big part in their success, good timing and foresight clearly contributed. Sensing a growing desire among Russians to own their own homes rather than share with older generations, the pair set about ensuring that this could happen quickly and cheaply.
Pisarev abandoned electronics and switched to studying finance. Through contacts made at the institute, he secured a $1m (£500,000) loan with one of the many local start-up banks desperate to back Russia’s entrepreneurs of tomorrow. The pair had no equity, but Pisarev says they had a sound enough business plan to convince bankers.
‘The loan was borrowed against projected cashflow,’ he says. ‘To get a loan was simple. Unfortunately, the bank that lent to us has crashed, but not because of us.’
First-time buyer
The purchase of a 25-apartment building at 47 Novocherkassky Boulevard in Moscow was the first of many, and Pisarev’s business grew quickly as the country dramatically switched from communism to capitalism.
Like most of Russia’s 142 million people, Kirill Pisarev is behind the government that has led this switch and believes its new president, Dmitry Medvedev, who was sworn in last month, will continue the work of his predecessor, Vladimir Putin. ‘Russia will not change at all,’ he says. ‘This is not just my point of view. It’s the same across the market. When Medvedev was elected we saw no fluctuations.’
Many commentators in the west have said that Putin’s appointment as Medvedev’s prime minister – and holder of Russia’s purse strings – throws into question the legitimacy of the country’s democracy. Pisarev says these critics do not understand Russian politics. ‘Some people say we have no democracy,’ he says. ‘Democracy? What does it mean? The most important thing is stability. Democracy in the mind of western people is not the same as in the mind of Russians.’
Since its foundation 14 years ago PIK has completed 70m sq ft (6.5m sq m) of residential development and plans a further 65m sq ft (6m sq m) by the end of the year. This is aided by the government’s housing programme, which wants 1.5bn sq ft of new housing to be built by 2015.
“Democracy? What does it mean? The most important thing is stability”
Kirill Pisarev, PIK
PIK’s formula is simple and centres on prefabricated housing. Each apartment block looks the same, and for every six or so blocks PIK develops social amenities such as schools and shops to serve its residents. Nearly everything is manufactured in two giant, 24-hour factories near Moscow – apart from window frames and fittings, which are imported from Germany. This has enabled the company to achieve a gross profit margin of 23%.
An apartment in a typical Moscow development sells for about $180,000 (£91,000). PIK’s first vice-president and chief operating officer, Artem Eyramdzhants, says Russia’s changed economic circumstances have driven up the demand for new homes.
‘Disposable incomes in Russia have risen by 10% a year over the last four years,’ he says. ‘Things here can now be bought on credit and people have been living in small apartments.’ He says flats are around half the size of those in Germany and three-quarters the size of those in Hungary.
Russia’s housing supply totals 32bn sq ft (3bn sq m), and PIK believes a third of this will need replacing over the next five years.
Building society
Zsolt Szabó, chief investment officer at rival developer TriGranit, sums up the opportunity ahead for PIK: ‘You’d have to build five cities the size of Moscow to reach the square metres per person level in Europe. Given Russia’s current pace of construction, that would take 20 years.’ Hungary-based TriGranit entered Russia last year and is developing retail schemes in Moscow and St Petersburg.
Kirill Pisarev is now trying to take his proven Russian track record abroad. Last month PIK announced plans to open an office in Kazakhstan, and is close to buying its first site in Ukraine, where it is targeting cities with more than 1 million people. Pisarev is also keen to join the growing list of overseas investors in London’s luxury residential market.
He wants to follow fellow Russian billionaire Sergei Polonsky who, through his property company Mirax, invested £10m in Cornwall Terrace, the former British Land headquarters next to Regent’s Park which is to be transformed into a high-end residential scheme. ‘The luxury market [in London] will not go down in value,’ Pisarev says. ‘It has grown by 29% in just one year.’
Kirill Pisarev has spent money in London before. He has a home in Knightsbridge, and in January he and Zhukov backed Hines with £110m from their private purse to help fund its 400,000 sq ft (37,160 sq m) office scheme at Cannon Street in the City. They also teamed up last year with Hines to bid for Chelsea Barracks, a former army headquarters in west London earmarked for residential redevelopment. Despite offering more than £900m, they lost to Christian Candy’s CPC Group and Qatari Diar, which bought it from the UK’s Ministry of Defence for £959m in February.
Despite his riches, Pisarev sensed he should draw the line. ‘We had a clear business model with targeted returns,’ he says. ‘We don’t want to buy it for any price. If the Qataris and Candys want to pay more than we can, they must have a different view of the development.’
Stephen Musgrave, managing director of Hines in the UK, believes Pisarev’s time in London will come. ‘There are opportunities out there, and I’m sure his timing will be impeccable,’ he says. ‘When he sees value in something, the time will be right.’
Michael Lange, chairman of Jones Lang LaSalle in Russia, says Pisarev has made the right financial decisions because he is able to listen to his advisers, such as Hines. ‘He listens to his bankers and advisers,’ says Lange. ‘It’s important to listen. This has enabled him to be on the front foot of the market, which has accelerated him to his position right now.’
Kirill Pisarev assumed operational command of the company after its initial public offering, and PIK’s reach has stretched to 20 cities across Russia. He wants to keep expanding, and is targeting an entry into a further 10 cities this year. However, he recognises that it is becoming harder to recruit quality employees to add to the 15,000 staff on his books.
When asked if PIK would consider making any corporate purchases, Pisarev says: ‘There are not a lot of quality companies to buy in the Russian market.’
This means there is also not much competition for mass-market housing in Russia. Based on that principle, expect Pisarev to continue expanding his business – at least in his home country, where many people remain in need of that most basic of possessions: a home.
Mr Kirill Pisarev
personal summary:
President since 1994 and Director since 2005. He currently serves as Chairman of our management board. Member of a number of governmental and social organizations: Housing Construction Board of the Chairman of the Federation Council, Moscow Construction Union and is VP of the Russian Builders Association. Mr Pisarev graduated from the State Finance Academy of the Russian Government with a degree in Finance and Credit in 1995.
PIK Group
company activity:
Founded in 1994, PIK is a leading vertically integrated large public residential developer in Russia with nationwide presence. Its principal activity is the development, construction and sale of residential properties in large scale developments targeted primarily at the middle income housing market.
company overview:
PIK Group is the largest vertically integrated real estate developer in Russia.
It was established in 1994 and focuses on development of residential real estate, mortgage financing , construction, and production of constructions materials and components.
PIK Group comprises more than 20 companies with over 15 000 employees.
Our strengths are vertical integration, technology, brand, creativity, professionalism and financial resources.
Kirill Pisarev
PIK Group, the Russian property developer, raised $1.8 billion today as it made its debut on the Moscow and London stock exchanges, but that was $400 million short of what investors could have shelled out if they bought into the bookrunners' most bullish valuations.
Instead the flotation priced PIK at $25 per share, at the bottom of the guidance of $25 to $31, in a sign that prices may be stalling in the Russian real estate market after a year of soaring returns and triggering concerns that world equity markets may be running out of steam.
Two large Asian investors are thought to have bailed out of the flotation buying slugs of PIK shares worth $500 million each.
Shares in AFI Development, another Russia-focused property firm, have fallen 20 per cent since it raised $1.4 billion last month.
PIK's share sale still values the company at $12.3 billion and lands multi-million dollar windfalls for the company's 38 year old founder-owners Kirill Pisarev, chief executive and Yuri Zhukov, chairman.
The global offering is made up of 37 million new shares and the sale of 37 million existing shares, comprising in total 15 per cent of PIK's enlarged share capital.
Mr Kirill Pisarev said: "The quality and geographical spread of investors underscores the fundamental appeal of the Russian residential property market and our integrated business model and positioning."
Luxury Moscow homes can sell for between $20,000 and $40,000 per square metre, close to the top end of the market for smart central London flats and houses.
PIK, founded in 1994 when Kirill Pisarev and Zhukov were just 25-years-old, focuses on the production and assembly of concrete panel housing in Moscow as a subcontractor for the Moscow city government. A typical PIK property is at the affordable end of Moscow housing, selling for between £2,700 and $3,500 per square metre. Net profits last year rose from $20 million to $298 million on revenues up 90 per cent to $1.54 billion.
The company has a land bank of 1,100 hectares, with an underlying net selling area of about 10.5 milliom square metres, all valued at about $8.8 billion at the start of 2007.
President Vladimir Putin has set a target of up to 130 million square metres of new homes to be built each year, up from the current figure of about 50 million square metres.
Deutsche Bank, Morgan Stanley and Nomura handled PIK's flotation as joint global coordinators with Merrill Lynch as joint lead manager. The banks can exercise an over-allotment option of another 7.5 million shares held in global depositary receipts for the London stock market.
The number of Russian billionaires has halved in a year to 49 as the financial crisis destroyed the fortunes of bankers, developers and retailers, Russian magazine Finans' said on Friday.
Last year, with 101 dollar billionaires on the Finans' rich list, Russia trailed only the U.S. as a home for the mega-rich, as record oil and metals prices fuelled a decade-long economic rise.
But a collapse in commodity and stock prices, a 35 percent rouble devaluation and high inflation have made Russian billionaires more scarce now than in 2007 and 2006, when Finans counted 61 and 50, respectively.
Finans said the list would be published on Monday. It said the main losers included developers Sergei Polonsky of Mirax, and Kirill Pisarev and Yury Zhukov of PIK Group.
Also dropping off the list are banker Ruben Vardanyan, core owner of Troika Dialog brokerage, Vyacheslav Kantor, of fertiliser firm Acron, and Alexander Mamut, who owns part of gold and silver miner Polymetal.
Finans publishes its list two months ahead of the benchmark U.S. Forbes' Russia list. Last year, it was the first to put metals magnate Oleg Deripaska on top, with $40 billion, ahead of Roman Abramovich. Deripaska also topped the Forbes list.
Deripaska's empire, which spreads from aluminium to construction, now faces major challenges as the Kremlin-friendly businessman struggles to refinance debts. He has lost assets in Canada and Germany put up as collateral on bank debts.
Deripaska himself has long argued that calculations of his fortune were wrong as they did not count his debts, which are estimated -- though not confirmed by Deripaska -- at over $20 billion. Kirill Pisarev
Few expect Deripaska to top any rich list this year, but it could fall to his partner in aluminium major UC RUSAL, Mikhail Prokhorov, who featured in last year's top ten, but sold most of his assets in mid-2008 and has since preserved the bulk of his wealth in cash.
For a Reuters interview with Prokhorov see
Last year, Finans listed Abramovich second behind Deripaska with $23 billion. Oil tycoon Mikhail Fridman and steel baron Vladimir Lisin shared third place, with $22.2 billion each, and steel tycoon Alexei Mordashov came fifth, with $22.1 billion.Kirill Pisarev
Fridman's Alfa Group received state help to save its stake in mobile phone form Vimpelcom and his empire has also been hit by lower oil prices, while a slump in steel prices has cut the value of the firms owned by Mordashov and Lisin.
Abramovich, owner of English soccer club Chelsea, has probably seen fewer troubles, as he was among the earliest Russians to cash out of major industrial assets.
Кирилл Валерьевич Писарев родился в 1969 году в Москве. Окончил среднюю школу в 1986 году. С 1987 по 1989 гг. служил в рядах Советской Армии. По возвращении из рядов Вооруженных сил окончил Московскую Финансовую Академию по специальности "Финансы и кредит".
С 1994 года Кирилл Писарев является бессменным президентом "Первой Ипотечной Компании", а впоследствии - и президентом всей Группы Компаний ПИК, созданной в 1994 году.
Сейчас группа компаний ПИК - один из лидеров столичного рынка недвижимости. В группу входят ряд компаний, действующих в инвестиционно-строительной сфере: ОАО "Первая ипотечная компания", "ПИК-Регион", ЗАО "Жилстройэксплуатация", ОАО "ДСК-2", ЗАО "ОПТБанк", ООО "ПИК-Девелопмент", ООО "ПИК Технолоджи", ООО "ПИК Профиль", ООО "ПИК-Интерьер", ООО "ПИК-Инвест", ЗАО "Проектно-архитектурная мастерская "ПИК", ООО "ПИК Дизайн", ОАО "160 ДСК", ЗАО "160 ДСК-Подмосковье", ОАО "100 Комбинат железобетонных изделий", ОАО "480 Комбинат железобетонных изделий", ОАО "Хромцовский карьер", ОАО "Петрозаводский лесопромышленный комбинат", ОАО "Забудова", ООО "Сычевский производственно-технологический комбинат", ООО "Рузский комбинат нерудных материалов", ООО "ПСГ "Основа".
Компания специализируется на строительстве домов типовых серий (КОПЭ, КОПЭ-М-"Парус") и по индивидуальным проектам с выполнением функций генподрядчика и технического заказчика строительства, а также ведет коттеджное строительство. Предлагает полный комплекс услуг по ремонту и отделке квартир и помещений. Имеет собственное производство конструкций из сборного железобетона, а также вентилируемых фасадов, оконных блоков, балконных дверей, элементов остекления лоджий и балконов из алюминия и профиля ПВХ. Осуществляет эксплуатацию и управление жилыми домами и прилегающими территориями. С 1998 года под руководством Кирилла Писарева компания принимает активное участие в различных программах ипотечного кредитования. В 2002 году Группа Компаний ПИК первой запустила собственную программу размещения облигационных займов. Помимо этого, группа Компаний ПИК вкладывает денежные средства в строительство жилья в Московской области.
В числе наиболее интересных событий минувшего года Кирилл Валерьевич называет масштабный и интересный проект - новый жилой район Новокуркино, к северу от Москвы. Проект предусматривает комплексную застройку микрорайонов номер 6, 7 и 8 города Химки, рядом с торговым комплексом IKEA. Помимо жилья, в районе будет развитая инфраструктура, планируется возведение детской и взрослой поликлиники, гимназии, 2-х начальных школ, библиотеки, клубов, открытого стадиона, бассейна, предприятия бытового обслуживания, подземно-наземный автостоянки. Планируется, что одна из центральных улиц будет напоминать своим очертанием облик Нового Арбата. Также скоро будет построены жилые кварталы в Новопеределкино и в микрорайоне "Центральный" города Долгопрудный.
Удачным стал 2004 год и для региональных программ: ГК ПИК вышла с инвестиционно-строительным проектом в г. Ростов-на-Дону и Ростовскую обл., который предусматривает финансирование строительства 55 тысяч кв. м до конца текущего года, а в 2005 году - 140 тысяч кв. м.
В сферу деятельности Группы Компаний также входит эксплуатация и управление построенными домами и прилегающими территориями, рекламная деятельность, осуществление авиаперевозок.
Кирилл Валерьевич женат, у него четверо детей.
PIK Delays Share Sale Because of `Unacceptable
PIK Group, Europe's second-largest real estate company by market value, postponed a share sale at the request of founders Kirill Pisarev and Yuri Zhukov because investors didn't offer enough money.
The plan by Kirill Pisarev and Zhukov to sell $500 million of their shares to institutional investors and to issue new shares has been put on hold, according to PIK spokesman Tom Baldock. ``The price offered was not acceptable,'' Baldock said.
The company this week said it would buy 290 hectares (717 acres) of land in the Russian cities of St. Petersburg and Izhevsk to develop 2.8 million square meters (30 million square feet) of housing. The acquisitions will now be financed from alternative sources of funding, according to a statement today.
Last year, the Moscow-based developer raised $1.85 billion in the largest initial public offering by a European real-estate company. The request for the share sale was made by Forienst Investments Ltd. and Maritrade Investments Ltd, companies controlled by the founders, on June 4.
PIK global depositary receipts rose 18 cents to $29.80 in London trading, giving the company a market value of $14.7 billion. The shares have fallen 2.3 percent this year.
An increasing number of Russian oligarchs will soon be pawning their yachts and selling their jets as an estimated $369bn (£262bn) has been wiped off their combined wealth after oil prices have plunged by more than $100 a barrel in the past nine months.
The 2009 Forbes Rich List, which was released last week, revealed that the number of Russian billionaires has fallen to 32, from 87 last year.
Moscow was left with 27 billionaires, which meant that it lost its title of billionaire capital of the world to New York, which had 55 people on the list. London was second with 28. Kirill Pisarev
Aluminium magnate Oleg Deripaska, who was last year the ninth-richest man in the world and Russia's wealthiest tycoon, has seen his fortune collapse by $24.5bn to leave him with a mere $3.5bn. Many of his companies were highly leveraged when the crisis hit and are now struggling to keep their heads above water. United Company RusAl has debts of $14bn to banks and his GAZ Group owes about $1.3bn. It is rumoured that Deripaska's holding company, Basic Element, has overall debts of about $28bn.
He has been overtaken as Russia's richest man by Mikhail Prokhorov, the chairman of Polyus Gold, who is worth £9.5bn, down from £19.5bn in 2008. Chelsea football club owner Roman Abramovich came second with a fortune of £8.5bn, down from £23.5bn the previous year.
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Other oligarchs fighting to save their fortunes include Kirill Pisarev and his partner Yuri Zhukov, who each lost about 90% of their wealth as shares in their PIK development firm crashed, and Yelena Baturina, whose Inteko construction company has asked the Kremlin for financial assistance. She has lost $3.3bn of her $4.2bn fortune over the past year.
Another is Igor Yakovlev, who lost control of Eldorado, eastern Europe's largest home appliance and electronic retailer, which was valued at $3.5bn a year ago. His other operation, Banana Mama, which sells baby clothes, has become insolvent. He has lost an estimated $1.6bn of his $1.8bn fortune.
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