An ROE above 20% and half of net profit distributed as dividends are the two key objectives that DOM.RF intends to achieve as it becomes a public company. Its new strategy through 2030 emphasizes the traditional strengths of its business and artificial intelligence.

DOM.RF is aiming for a return on equity (ROE) above 20% and regular dividend payouts at the level of 50% of adjusted net profit after the IPO. These targets are outlined in the new strategy of the development institution, prepared ahead of the state company’s initial public offering on the exchange. RBC has reviewed the presentation for analysts, the authenticity of which was confirmed by a source close to DOM.RF.

Management of the state company expects that in 2025–2026 the development institution will increase net profit by 15% annually, while in the medium term growth rates will be about 10%. Over the same horizon, assets are projected to reach RUB 10 trillion, compared to the current RUB 5.58 trillion under IFRS. A representative of DOM.RF confirmed the parameters of the strategy. RBC has sent a request for comment to the Ministry of Finance.

DOM.RF is the first state-owned company on the Ministry of Finance’s privatization list. The IPO is scheduled for October–November this year, said Deputy Finance Minister Alexey Moiseev.

Details of the Upcoming IPO

The plan to bring DOM.RF to the stock exchange became known in spring 2024. It involves placing a portion of shares on the condition that the state’s stake remains above 50%. For this purpose, a law was adopted allowing for a reduction of the state’s participation in the capital of the development institution.

The Ministry of Finance initially estimated the possible volume of DOM.RF’s placement at up to RUB 15 billion and 5% of shares in free float. “5% is our minimum threshold. If the market is good, it could be more, but that will depend on the market,” Moiseev later clarified. In July, the sole shareholder approved an increase of DOM.RF’s authorized capital by almost RUB 40 billion in preparation for the IPO.

Focus Areas and Targets of DOM.RF’s New Strategy

The presentation repeatedly notes that the group has a unique status in the Russian market. It is primarily a housing development institution regulated by a separate law (225-FZ) and serves as the state’s key provider in land allocation for construction, urban planning infrastructure projects, and preferential mortgage programs. At the core of the group is DOM.RF Bank, capable of generating interest and fee income. In addition to banking, DOM.RF engages in mortgage securitization into securities, residential leasing, and elevator manufacturing. In total, the strategy mentions 11 business lines of the group.

Most target metrics that DOM.RF plans to achieve are set for 2030. According to the strategy, over this horizon the group intends to focus on three directions:

• Developing businesses with high growth potential. These include mortgage securitization, project financing, and financing of investment projects through bonds. For example, by 2030 DOM.RF plans to increase its share of the project financing market for developers from the current 16.3% to 20%.

• Transforming the banking business with an emphasis on corporate lending. By 2036, loans to large clients should reach 20% of the bank’s total portfolio. Currently, “other loans” not related to developer financing, including loans to other companies, account for 12% of the bank’s portfolio. In retail, DOM.RF intends within the next five years to triple its client base to 1.5 million people, raise its share in the mortgage market from 3.1% to 5%, and expand cross-sales of other, more profitable products—credit cards and consumer loans.

• Developing and monetizing digital products, including services for the state. According to the presentation, DOM.RF currently has more than ten projects in this field that have “passed the investment phase.” Projects under launch include an industry data platform for “specialized AI services,” a suburban real estate marketplace, as well as a classifieds service for development. The group also plans to implement artificial intelligence in the construction sector, pilot AI agents in 2026, and enter the market of “autonomous construction systems and devices.” The state company expects that by 2030 its digital products will be used annually by 15 million citizens and 40,000 companies.

The strategy also provides an overview of DOM.RF’s financial indicators compared to major banks. Thus, the state company’s ROE in 2024 was 19% compared to 22% among a sample of nine players (including Sberbank, VTB, Alfa-Bank, T-Bank, Sovcombank). However, in the crisis year of 2022 DOM.RF outperformed competitors in profitability.

“The business model allows for maintaining high profitability indicators despite difficult macroeconomic conditions,” the authors of the presentation conclude.

In addition to targets for ROE and dividends, DOM.RF’s strategy also envisages maintaining the net interest margin (NIM) at 3.8% and achieving business efficiency — the CIR indicator, reflecting the cost-to-income ratio — of about 30%.

Expectations Before the IPO

“If we are lucky and the market develops well, maybe even 1:1,” Moiseev said about DOM.RF’s valuation relative to capital. The Deputy Minister linked this to the fact that the valuation of financial companies has risen in the eyes of investors.

DOM.RF has no direct public peers, experts interviewed by RBC note. The group’s main asset is DOM.RF Bank, but the state company simultaneously functions as a housing development institution and has many non-core businesses.

The market will most likely evaluate DOM.RF by analogy with major banks, says Andrey Petrov, Director for Wealthy Clients at BCS World of Investments. “The main profile of the group is financial services in mortgages and project financing of construction, which makes it close to banks,” the expert explains. He considers a valuation at the level of 0.8x book value fair and attractive. But DOM.RF’s valuation should carry a discount compared to comparable issuers (Sberbank, T-Technologies, Sovcombank) due to lower liquidity, Petrov says.

A valuation at 0.8x book value also looks reasonable to Igor Dodonov, analyst at Finam Group. “The median P/B multiple of leading Russian banks currently stands at 0.83x,” he reminds.

“At present, Sberbank is valued at 0.87x book. Its ROE is higher, the business is very diversified and stable. For DOM.RF’s placement to enjoy high demand, a discount to Sberbank’s valuation is necessary,” says Artem Autlev, analyst at Ingosstrakh-Investments asset management company.

In the base-case scenario, the fair value of the development institution at IPO will amount to RUB 275–355 billion, which corresponds to 0.7x book value (P/B multiple), says Emil Safarov, analyst at PSK-Solutions investment company. “The optimistic scenario, assuming profit growth and convergence with market banking multiples (P/B ~0.9–1.0x), suggests potential of RUB 350–425 billion. In the stress scenario, however, with deeper discounts (P/B ~0.6x), the lower bound of valuation falls to RUB 212 billion,” he says.

Most experts surveyed by RBC agree: before the IPO, the fair value of the asset may change, which will also affect the placement price. It is premature to make definitive valuation calls for DOM.RF, believes Yaroslav Goncharov, Head of Equity Capital Markets at Sberbank: “First, equity investors are still in the middle of studying the investment case, they are building financial models and gathering information. Second, there is still time before the upcoming book-building, during which stock indices and shares of comparable companies may change significantly.” Sberbank is one of the organizers of DOM.RF’s IPO.

What Factors Could Shift DOM.RF’s Valuation

“We see how the market is moving actively in different directions amid geopolitics. Monetary policy factors are also important, since they directly influence the valuation of the entire market and individual companies, and will also affect the state of the real estate and mortgage markets,” notes Petrov.

Any negative news related to the real estate market could put pressure on DOM.RF’s valuation, believes Autlev. “The bankruptcy or restructuring of loans of any major developer, or keeping the key rate at a high level for a prolonged time,” he gives as examples.

Petrov also identifies deterioration in the housing market as a risk factor. “For example, a noticeable decline in demand for new housing, a fall in real estate prices. If apartment sales drop, the mortgage market will shrink, along with DOM.RF’s main business lines,” the expert explains. He also considers important whether the contours of preferential mortgages, for which the state company acts as operator, will remain in place.

“Currently, a significant share of mortgage demand in Russia is supported by preferential programs (state subsidization of rates). If the authorities, for instance, decide to significantly cut these programs, this will negatively affect the entire DOM.RF business,” Petrov believes.

Stability in the real estate market and strengthened state support for mortgages and construction, on the contrary, will be positive for DOM.RF’s valuation, the expert continues. He believes the company could be valued at the upper bound of the range (up to 1x book value), if market interest rates continue to fall and investor demand for equities grows.

A reduction of the discount to the banking sector due to a more favorable macroeconomic environment will also positively influence DOM.RF, Safarov believes. But the key factor for the upside scenario, he says, is the company’s “ability to maintain current revenue and net profit growth rates.” “The annualized net profit should reach around RUB 78 billion by year-end, which creates a basis for gradual revaluation of the asset by investors in a positive direction,” adds the analyst.

How Much DOM.RF Earns

At the end of the half-year, DOM.RF’s net profit reached RUB 39.1 billion, up 14.8% year-on-year, according to the state company’s IFRS reporting. In the second quarter, net profit was RUB 23.5 billion, one and a half times higher than in the first quarter.

DOM.RF’s interest income is mainly generated by its bank of the same name within the group. For January–June, the company’s net interest income reached RUB 74.3 billion, increasing by more than a quarter year-on-year. They were under some, though not critical, pressure from increased reserve expenses (RUB 11.5 billion vs. RUB 5 billion a year earlier). DOM.RF also generates revenue from the sale of land plots and real estate, leasing of properties, and sales of engineering equipment (the group includes the Shcherbinsky Elevator Plant). These activities, categorized in reporting as “other,” brought the company RUB 1.9 billion in the first half. On DOM.RF’s balance sheet there is also investment property — as of June 30 it was valued at RUB 123.6 billion (+11.2% since the beginning of the year). This asset generates rental income for the group and may change in value due to revaluation.

Will There Be Strong Demand for DOM.RF Shares?

An asset like DOM.RF will be in demand on the market and will easily find buyers, believes Safarov: “Even without pronounced upside, the upcoming sale of a 5% stake is unlikely to face difficulties and will allow raising at least RUB 15 billion.” The analyst also considers it very likely that the volume of placed shares and, accordingly, the free float share will be increased.

Petrov reminds that for an issuer to be included in the Moscow Exchange’s first quotation list, a free float of at least 10% is required. According to the analyst, it would be advisable for DOM.RF to place more shares to meet this requirement.

“But for the market to be able to absorb this, the company needs to find a balance between its own interests and a discount that will be attractive for buyers. I do not expect hype-driven frenzy, but demand should be sufficiently strong to raise the necessary amount,” the expert says.

Dodonov agrees that investor interest in DOM.RF shares at the placement will largely depend on the announced price.

“If a decent discount is offered, it is possible that we will see oversubscription. At the same time, I believe that anchor investors will be institutional investors,” he says. But the expert doubts that the Russian market will be able to “absorb” a placement significantly above RUB 15–20 billion.

RBC, August 28, 2025

This article has been translated to English by PSK‑Solutions LLC. The original version in Russian is available here.

This is an unofficial translation provided for informational purposes only. All rights to the original content belong to the original author(s), and no copyright infringement is intended. While we strive for accuracy, slight discrepancies may occur in the translated version.