In an optimistic scenario, the first public offering of Rigas Namu Parvaldnieks (RNP) municipal housing manager shares could take place by the end of this year, the company’s board chairman, Maris Ozolins, said in an interview with the LETA. He noted that this largely depends on how quickly a consultant can be found to assist with the company’s initial public offering and how quickly decisions regarding the public offering of shares are made.

The summer work season has begun. What is the current situation - what are you doing on your own and what services are you outsourcing?

We are not outsourcing more than we have in the past - we are just doing it more strategically. This means that we constantly evaluate whether to do things ourselves or use an outsourced service. We make sure we do not become too dependent on any specific service providers.

For example, we will be mowing the lawn more ourselves now, using our own resources. We have purchased the equipment. Of course, we also work with outsourced services, but we have adopted the principle of breaking the work down into several smaller pieces. This helps a greater number of service providers apply and participate in our procurement processes. Consequently, we also have more options to choose from.

Could you be more specific about the areas in which you use outsourcing?

These include various types of repair work. For example, roof repairs, chimney cleaning, various structural work on buildings, as well as sewer and water supply work. But even here we do some of the work ourselves. This helps us better understand whether the prices are reasonable and what the actual costs are. Overall, this allows us to be less dependent on any specific service provider.

Do you have enough staff? At one point, we had major problems with staffing, especially with cleaners.

It depends on the field. Of course, Riga has its own unique challenges, and it is not just us - the unemployment rate is very low, so there is quite a bit of competition for employees. But we offer a wide range of benefits to our employees that may not be available at other companies. So at the moment, I would not say we have major problems finding staff.

You mentioned mowing lawns... One summer, residents protested strongly when the grass was mowed when it was hot and dry, the grass was scorched, and yet they mowed it anyway, kicking up a huge cloud of dust. How are you handling this now - are there any guidelines, or do you just assess the situation as it arises?

We are constantly learning from our experience in previous years. This year’s grass-mowing season has not really started yet, but it is clear that during dry and hot weather, we will not mow the grass to avoid dust. We will not assign such tasks to either our employees or contractors.

What is the current situation with cleaners? At one point, there was a shortage of cleaners, so teams were formed that would clean one building, then move on to the next. How many teams do you have?

Here again, we try to maintain a balanced approach. We have both cleaners and crews. The crews currently maintain about 40 percent of the indoor areas, which are stairwells, and about 30 percent of the outdoor areas. The rest is handled by cleaners. Both models have their pros and cons. Crews, of course, work much faster and more efficiently; they are equipped with machinery and tools that a single cleaner could not afford to provide. Consequently, crews are faster, more efficient, and also cheaper for residents.

But people are used to their own cleaner, to seeing him every day, knowing he is on-site and familiar with the building. That is why we give buildings the option to choose. If a building wants to keep its cleaner, we offer and allow that as well. It must be understood, however, that a cleaner is more expensive than a crew.

What are the current salaries for cleaners?

When it comes to pay, cleaners’ salaries vary widely, starting at the minimum wage level; however, for a highly productive cleaner, the gross salary can reach as high as EUR 1,700-1,800 per month.

Are there any plans to completely phase out individual cleaners and switch to a team-based model?

No, we have no such plans. We understand that situations vary and people are different. But overall, the shift toward teams is continuing. We also see the problem of an aging workforce - it is not easy to find cleaners.

How many teams do you currently have?

About 20.

The old Soviet-era buildings still have problems with their elevators. How are these issues resolved? To what extent does this depend on spare parts manufactured in Belarus?

In total, there are about a thousand elevators in the buildings we manage, and many of them date back to the Soviet era. We have now begun negotiations with modern elevator manufacturers in Europe. We currently have offers from five different manufacturers capable of installing new, modern elevators in the old elevator shafts. We already have one example - an official opening will take place in the near future. This is an elevator in Purvciems neighborhood, on Varaviksnes Street, installed as part of the Altum program; financial support was available for the elevator replacement.

Currently, there are about 15 more buildings that have applied for this program and where elevator replacements are planned. In total, about 30 elevators are planned to be replaced. The advantages of the new elevators are significant - they are quieter, more energy-efficient, more modern, and break down much less frequently. After all, it is brand-new equipment. And another very important advantage is that, by installing the new elevator in the old shaft, it is possible to widen the entrance. This means that it will now be possible to enter the elevator with a stroller or a wheelchair. In Soviet-era elevators, this was often not possible.

Of course, there are also costs. Replacing a single standard elevator costs approximately EUR 50,000-60,000. Altum covers up to 40 percent of the cost. You can also take out a loan, and the elevator manufacturers themselves offer to spread the payments over a longer period. We believe that in the long run, this is better than constantly patching up the old elevators manufactured in Belarus. Now there is also a problem with spare parts- many control units and components can no longer be purchased normally. Parts come from Italy or Turkey, and often individual components cannot be replaced; the entire control unit must be replaced. And replacing just one unit can cost around EUR 10,000 for an old elevator. That is why it is often actually more cost-effective to install a new elevator rather than constantly repairing the old one.

How many of these old elevators are in urgent need of repair?

We conduct regular elevator inspections. It is not as if an elevator suddenly stops working and only then do we start doing something. Each elevator undergoes both an annual in-depth inspection and regular checkups - actually twice a month, as well as technical maintenance. Essentially, these elevators can still operate for some time, but the problem lies in the details. It is not the case that we have elevators in a dangerous condition that must not be used. If a risk is identified during inspections, the elevator is shut down and emergency repairs are carried out.

You said that you have found five elevator suppliers who are willing to install new elevators in the old shafts. What are these companies?

They are European manufacturers - Kone, Schindler, Metron, Otis, and MP Lifts.

Did the residents themselves decide they wanted a new elevator?

It was a part of a full building renovation project. The building participated in the Altum program and received funding not only for the elevator replacement but for the entire building renovation.

We have already touched on the topic of home energy efficiency. These days, we often hear complaints that improvements in energy efficiency are happening too slowly. What is the current situation?

In fact, over the past year, the process has not been slow but very rapid. There has been a surge. If we look at the total number of homes, it still seems small. Everything depends on funding and available co-financing. In the latest Altum program, the funding was practically snapped up instantly. We are currently helping about 60 buildings prepare all the necessary documentation for their projects. These buildings are already awaiting funding approval. And that is actually more than the total number of homes renovated in Riga in all previous years combined.

How many homes do you manage in total?

About 3,000. Of course, we would like to renovate more, but unfortunately, everything depends on the available funding.

All in all, this renovation issue has been on agenda for about 20 years, and it feels like this system is not really working in Riga and other major cities.

Our experience shows that we can actually accomplish a lot. We have held meetings in about 400 buildings, explained the process, and helped collect signatures. In the end, about 60 buildings have applied for the programs.

We actually do all this bureaucratic work, but we cannot force a building to be renovated or force people to take out a loan. Neither the Constitutional Court nor any other legal framework would allow that. You cannot just tell the owners of 100 apartments, "Now you will have to pay off a loan for 20 years." Nor will a bank grant a loan to a building whose owners have not made that decision themselves. It is much more important to think about co-financing instruments. That is the main issue. Because without co-financing, renovation is economically unfeasible for many.

Currently, the Ministry of Economics is working on a new program that will be slightly different from the previous one. We will see exactly how it works and how much support it will provide.

But are not you, to some extent, a hostage to this situation? After all, you manage a huge number of Soviet-era apartment buildings. If you go to the stock exchange and an investor looks at your portfolio, they might think - that is a real mess, and it is only going to get worse every year.

I would not say it is a mess. It is not that bad. Soviet-era buildings are not in nearly as bad a condition as is often claimed. This is not some unique problem to Latvia; such technologies were also used in other European countries, such as France, and these buildings are still standing there today. We monitor the technical condition of each building, and overall, the structures are in good shape. Yes, renovation is necessary both for energy efficiency and to preserve the value and technical quality of the buildings. You can do a full renovation, which is very expensive, or gradually restore specific elements.

We are currently also implementing detailed assessments of the buildings’ technical condition. Formally, such an inspection must be carried out once every ten years, but we actually monitor them much more frequently. Each building element is given a percentage rating - the roof, facade, utilities, and so on. At the end, the total percentage of the building’s wear and tear is calculated. This allows apartment owners to clearly see the condition of their building and which elements should be renovated first.

In your view, are these renovation programs even feasible without support from the government or the European Union? Those are not the wealthiest people who live in typical Soviet-era apartment blocks.

Without support, it is difficult to justify such renovations economically. Of course, renovation has other benefits as well - people effectively start living almost as if in a new home. There are new utilities, lower heating bills, and the building looks much better.

What is the current situation with residents’ debts?

Overall, the situation is quite stable. Over the course of a year, nearly 99 percent of our clients pay all their bills.

A very topical issue right now is various security concerns and foreign drones. If a flying object suddenly appears, the first place a person will try to take shelter is the basement of their home. Are basements prepared?

Basements vary from house to house. Some are well-prepared, while others may not be suitable for use as a shelter at all. The problem is that there is not really a program to fund basement preparation as opposed to the construction of a shelter, which is a much larger investment. This largely falls on the residents themselves. Consequently, people are not exactly rushing to renovate these basements. Moreover, there are basements that simply cannot be adapted, they are in too poor a technical condition. And then it may even turn out that the basement is more dangerous than the outdoors.

Some municipalities have organized basement cleanup campaigns - they bring in a container, set a specific date, and people clean out the hallways and common areas. Are such campaigns planned in Riga?

That would be more of a question for the Riga City Council, the local government. As a company, we can only organize such things if there is funding for it.

But this is also a safety issue. Should we really rely on each building deciding for itself what to do? Should this not be a centralized solution?

This is definitely a matter for the local government. We are not the only property managers in Riga - we manage about 30 percent of the buildings. The rest are under the management of associations and private property managers. Therefore, such matters must be addressed jointly and systematically. If funding is needed, that is also a municipal issue, not the concern of a single property manager.

What about the number of properties under your management? Is the number of clients decreasing or increasing?

In the past, there was even a policy that RNP should help buildings form associations and effectively reduce its own portfolio. But now the strategy is different - we operate like a normal company and strive to compete in the market. That is why we are also actively encouraging buildings to choose our management services. And the good news is that buildings are currently coming to us.

Where are most of the homes coming from right now?

Among the homes that left, most were smaller ones - the kind where it is actually relatively easy to organize management on their own. They formed associations and left. But some of them are now coming back. People realize that management does, after all, require a great deal of knowledge and experience, and it is not always possible to handle it on their own. Another group comes from private management companies. There have been cases where promises were made but not kept. Or the building’s reserves were spent on unclear needs, and residents were disappointed.

We see that competition in the market was very aggressive, everyone was trying to acquire buildings, making many promises, but in the end, those promises could not always be fulfilled.

What is the situation with savings? Is there enough money for day-to-day repairs?

Situations vary greatly, but overall things are improving. For example, we had one large building on Ieriku Street that was in pretty poor condition. For many years, the reserve fund was about EUR 0.15 per square meter. You cannot do anything significant with that kind of money. Now the reserve fund has been increased to a normal level, and we can finally start real repair work. Overall, we see that people’s mindset is gradually changing. In the past, many still held onto the Soviet-era mindset that the state would fix everything. Now, an understanding is gradually taking hold that people need to build up their own savings and invest in their property.

What is the current situation with debt collection? Are there still apartments where no one has paid for years?

At the moment, the process is very stable and well-organized. We have established a system for handling debts on a daily basis. If a person fails to pay for an extended period, the case is referred to court and then to sworn bailiffs. But if a person is willing to pay but cannot pay everything at once, we draw up payment schedules so that the debt is gradually reduced. Overall, we see that the situation is improving and the total amount of debt is gradually decreasing.

What kind of amounts are we talking about? Are we talking about millions?

Yes, we are talking about millions, but you have to look at it in context. We have also set aside reserves to cover these risks. We are audited every year by an international audit firm, which checks whether these provisions are sufficient and whether the company’s financial situation is stable. The new regulation regarding real estate apartments is very important. Previously, the debt remained with the individual; if an apartment was sold, the previous owner had to be tracked down, who had often already disappeared or moved abroad. Now the debt follows the apartment. This means it is very important for the buyer to verify that the apartment has no outstanding debts.

We have also introduced a very convenient solution on our self-service portal - it is possible to quickly obtain a statement regarding the apartment’s debts. The seller can immediately present this statement to the buyer.

Currently, the final decision on the initial public offering (IPO) of RNP shares is expected to be made by the Riga City Council after the strategy has been developed. How far along are you in this process at the moment?

Yes, first of all, it should be clarified that the decision adopted by the Riga City Council stipulates that the municipality must divest its stake in the company by the end of 2028. The mechanism for doing so is the listing of the shares on the stock exchange. Next, the Riga municipality must engage consultants. And this is not just about some general strategy. The consultants have a very specific task - to prepare all the necessary documents and procedures so that the council members’ decision can be implemented in practice.

Have you already discussed the timeline? Because the process is quite complex - the IPO prospectus, attracting investors, and everything else. Is it really feasible by 2028?

We have a clear understanding of the process and what needs to be done. There are also things we are already doing on our own, independent of consultants. For example, the company will need to be restructured from a limited liability company into a joint-stock company, because only then can the shares be listed on the stock exchange. This can be done in parallel. We have already researched this process extensively, so we generally understand what is required. Of course, much will depend on how quickly the procurement process for hiring consultants is finalized. But overall, looking at it optimistically, from the moment the process fully begins, we could be ready in about three months. This means that a great deal within the company is already in order according to stock exchange requirements. Corporate governance, internal policies, accounting, and financial processes - all of these already largely meet stock exchange standards. So, essentially, the main thing right now is to wait for the tender results and start the practical work together with the consultants.

In an optimistic scenario, the initial public offering could take place as early as the end of this year. But most likely, not all shares will be offered at once. That will also be one of the consultants’ tasks - to understand investor demand and determine what percentage of shares would be appropriate to offer in the first phase.

Usually, the main purpose of listing shares is to raise additional funds for the company. In the case of RNP, is the main goal simply to ensure that the Riga City Council withdraws from the company’s ownership structure?

In this particular case, the main goal is indeed to terminate the municipality’s ownership. The municipality has no reason to maintain a stake in a company that operates entirely under free-market conditions and does not fulfill any social functions. Therefore, it was decided that the simplest way to terminate this participation is to list the shares on the stock exchange. And currently, the plan is to list the existing shares, not to issue new ones.

So, will the company not receive any additional money from this process?

No, we will not receive additional funding at this stage. But we do not need it at the moment. The company has sufficient funds, and we do not have any massive infrastructure investment projects that would suddenly require very large sums. Our investments are more focused on the company’s own development - digitalization, mechanization, and improving the work environment. Of course, other development projects may arise in the future, such as acquiring companies or expanding into other markets. But that is not an issue today.

RNP had some pretty ambitious development plans - to expand beyond Riga, perhaps even to other Baltic cities. Have these plans been put on the back shelf for now?

The first task is to successfully complete this stock exchange process. This will be the first case of its kind in Latvia, where a local government exits a capital company through the stock exchange. We want to do this well and correctly. After that, we can start thinking about further development. And, in my opinion, we will not have to wait that long. Trying to do everything at once would be too complicated. The new shareholders will decide on the company’s future strategy.

It should be noted that the stock listing on the exchange is designed to prevent a single shareholder from acquiring a large controlling stake, but rather to distribute the shares among many investors.

But is not that a mistake? If there were a single major investor, the company might grow much faster.

That would be too risky. We do not know what a single major shareholder’s goals would be. They might want to maximize profits, for example, by reducing service quality, laying off employees, or selling assets. That would not be in the company’s best interest. For a publicly traded company with many shareholders, the main task is to act in the company’s best interest.

Once the shares are listed on the stock exchange, that will be a matter for the Riga City Council and its consultants, but I imagine they will also ask for your opinion - how do you view this share offering? Would you prefer to see large financial investors, or should a portion of the shares be reserved for private individuals?

In our case, I would definitely like to see a portion of the shares offered directly to private individuals. That would be one of the benefits of listing on the stock exchange. In fact, our clients themselves could become co-owners of the company and receive dividends.

Crucially, this would also promote overall financial literacy in the country, which remains at a fairly low level in Latvia. In this regard, we lag far behind even Lithuania and Estonia, where the investment culture is much more developed. I very much hope that other municipal capital companies will follow our example. But to attract investors, they will first and foremost look at the financial results.

When it comes to your future development strategy, will you develop a narrative to attract investors on your own, or will you wait for new shareholders and then plan for the future together?

There are two types of investors and, accordingly, two types of investment strategies. One is the so-called dividend story - investors who are looking for stability. They do not expect a rapid growth or aggressive expansion, because that always entails greater risks. We see that our company currently fits this dividend story very naturally. This could be attractive to investors. The second type of investor is those who expect rapid growth. And that would be the next phase, once the company is listed on the stock exchange. Then we will definitely pursue growth. We have a great many opportunities to develop while maintaining a stable dividend model.

Why is this business stable?

Because property management services are set in the law. We are obligated to perform these mandatory management tasks, and apartment owners are obligated to finance maintenance of the building. Consequently, if we can offer residents a good service, these revenues are very stable. This provides a solid foundation for stability. At the same time, we have very broad opportunities for growth, both by expanding our range of services and geographically. The idea of expansion has not gone anywhere. It remains part of our long-term strategy.