The highest level of discomfort: the developer’s projects may collapse successively
PIK Group is in danger of facing a financial crisis. The bankruptcy of its member firms one by one indirectly indicates this.
The PIK group of companies, led by the controversial developer Sergei Gordeev, is facing major problems. Several PIK-related structures have entered bankruptcy proceedings with significant losses all at once.
Experts believe that their downfall could lead to a chain reaction across the entire holding. Apparently, Gordeev does not want to take responsibility for these debts – therefore, a sudden change of ownership occurred in both companies when everything began to collapse.
What is happening in the country’s largest development group – in the material The Moscow Post.
The companies that went into the bankruptcy procedure are Delis-Invest LLC and Retail Standard-Pyatigorsk LLC. At the end of 2021, the former company reported zero revenue and a loss of 315 million rubles, with assets valued at minus 695 million rubles. In 2020, the latter reported zero revenue, a loss of nearly 60 million rubles, and assets valued at minus 148 million rubles.
The founder of both firms is JSC “Financial Expert” – a completely empty shell with an authorized capital of 10 thousand and the only employee. And earlier, they were owned by a PIK LLC PIK-Investproekt subsidiary.
PIK left the capital of Delis-Invest LLC in March 2021, and Retail Standard-Pyatigorsk LLC in February 2020. Colossal losses and debts arose precisely under Gordeev's structure, and it is still unclear where this money went.
Photo: Rusprofile.ru
For example, Delis-Invest is involved in venture investment at all… So, did the investments fail? Or is PIK itself “falling down”?
PIK “fell down”?
The PIK group of companies, founded by Rosbuilding, Sergei Gordeev, is currently the largest construction company in the country. However, critics compare it to a “financial pyramid” where they raise funds for new projects to cover old debts.
At the same time, PIK is now involved in several new projects that may result in long-term construction. These include three new residential complexes in St. Petersburg, as well as four houses in the Southern Military District of Moscow as part of a living complex near the Volgogradsky Prospekt metro station.
PIK may not survive until these plans are realized. There are concerns about this. As of the beginning of June 2022, the company had not yet submitted IFRS financial statements for the previous year. There is no mention of the first quarter of 2022 report.
According to the authors of the InvestFuture.ru trading site, this may be due to the existence of forward contracts. In 2017-2018, when PIK was still relatively stable, the group entered into several forward contracts for shares with a state-owned bank.
This type of contract means that if the share price increases, PIK makes a profit, and if it decreases, a loss is possible. This scheme could have been used as collateral for the bank itself.
PIK stock price. Image: Investfuture.ru
However, the reality is that in the first half of 2021, PIK shares were valued at over 1,000 rubles, but now they have almost halved to 540 rubles. This means that PIK, with its debt obligations, should have been in a very difficult situation. Will the company pay back the money to the bank?
It's worth noting that concerns about PIK's debts arose back in 2019. At that time, it was revealed that within a short period, the debts had increased to 50 billion rubles, which is 20 times more than in 2018, according to RBC. However, PIK managed to handle the situation at that time. Now, its former subsidiaries are going bankrupt.
There are claims that PIK disappointed in terms of generosity. While the entire country, including the construction market, was facing a crisis during the pandemic, PIK managed to make a profit while housing prices soared. It wasn't until April 2021, when Vladimir Putin instructed the FAS to check housing prices, that attention was drawn to this.
It's easy to figure out who is being criticized, as PIK is the largest developer in the country. At one point, Gordeev was considered almost untouchable due to his past role as a senator of the Federation Council, and his involvement in various government offices since the time of the raider bacchanalia of Rosbuilding.
According to more formal indicators, the head of PJSC PIK SZ appears to be doing well so far: the profit in 2021 amounted to 71 billion rubles. She also has state contracts worth 829 million rubles, most of which are likely held by the subsidiary companies.
It's noteworthy that Sergei Gordeev personally manages the parent company and, as of 2020, was the beneficiary of 59% of the group.
However, the ownership structure is not entirely transparent: back in 2006, 99% of the group’s shares were transferred to two offshore companies from the Virgin Islands, FMC Realtors Holding Inc. and IBG Development Group Inc. Was Gordeev trying to avoid paying taxes in his own country? Where does the profit actually go?
Otherwise, why such significant losses for the former “daughters” of PIK, which had to be urgently transferred to a “dummy”?
Meanwhile, PIK’s methods of operation have long been surrounded by myths. They are often accused of aggressively pushing for their services and using a lot of enticing tactics.
As per the authors of the Hellish Grandmothers telegram channel, before signing the DDU, they suggest finalizing an agreement of intent. Subsequently, it turns out that the price of the property has slightly increased due to various reasons.
Homeless
Previously, it seemed that PIK's projects were always completed without issues. But it appears that the principle here is that until they collect money from new equity holders, the old ones will have to wait. Additionally, PIK committed to completing the construction of many houses for other irresponsible developers. For instance, in 2016, they undertook the completion of the residential complex “Western Gates of the Capital”. Apparently, this has been extremely unfortunate for the already burdened equity holders, as per the authors of the onovostroykah.ru website.
A particular concern is the community's battle against PIK over ecological, architectural, and historical significance. For instance, in the Dmitrovsky district, the company acquired a plot on Lobnenskaya street, leading to threats of demolition for Veteran Park and the former military hospital. A petition against this destructive project was signed by over 12 thousand people.
In 2018, another request asked to stop developing the Myakinskaya floodplain, as 'PIK' planned to cut trees and build tall buildings, turning the area into a crowded area with standard houses. There is also a water tower nearby, so the construction site might end up in a sanitary zone.
No comfort
PIK has several divisions that are just as controversial as the main development group. One of them is PIK-Investproekt, which invests in questionable projects, real estate services, and PIK-Comfort, a division that manages apartment buildings built by the group.
Gordeev is losing the favor of the authorities for his actions. Unfinished construction and constant scandals, including those involving corruption, have changed the city authorities' attitude.
In March 2021, the governor of the Moscow region, Andrey Vorobyov, demanded that PIK-Comfort be expelled from the Moscow region, specifically Dolgoprudny, due to the constant scandals and complaints about the organization. Some people believe they are even sabotaging the work.
PIK Comfort is the largest private management company in Russia. According to their own data, they manage 32 million square meters of housing stock in Moscow and the Moscow region.
At the end of 2021, they reported a loss of 814 million rubles, but also have state contracts with the authorities for 265 billion rubles. How this money is used when the head of the Moscow Region explicitly asks to expel negligent public utilities from the region?
Vorobyov seems to be favoring 'his own' from the Samolet Group of Companies, which has money from his brother Maxim, and God Nisanov's 'Kievskaya Ploschad', who also owns part of the 'Aircraft' and acts as Vorobyov's adviser.
Gordeev's projects, used to operating in favorable conditions, are now failing one after another.
Andrey Vorobyov calls for the expulsion of 'PIK-Comfort' from the cities of the region. Video: YouTube channel MP
Despite having government contracts worth hundreds of millions of rubles, 'PIK-Comfort' does not want to work not only in the Moscow region but, according to 'Notepad-Voronezh', also in Voronezh, where they received most of the housing stock, possibly with the help of the governor of the Voronezh region Alexander Gusev.
Returning to the initial issue of significant debts and bankruptcy of subsidiaries, Delis-Invest LLC and Retail Standard-Pyatigorsk LLC indicate a very negative trend. It seems that Gordeev's business pyramid is collapsing.
A similar situation is seen for PIK SZ LLC – a customer service, which is currently in the liquidation stage with a negative asset value of 68 million rubles. Furthermore, PIK disappeared from its capital in 2019. Many other candidates are following their path. The nearest one is Pik-Construction Technologies LLC, which reported a negative balance of 358 million rubles at the end of 2021.
So far, it is still behind Gordeev’s structures. How long? And how long will PIK be on the market with such cases?
